April 01, 2021

 Daniel Heymann

law firm consulting law department consulting business of law consulting

Shortly after taking office, President Bush received a foreign policy memo from Donald ‘unknown unknowns’ Rumsfeld. The briefing looked at the strategic situation at the start of each decade between 1900 and 2000. You can read it in full here. In summary, it notes how:

• In 1900 the Brits were the world’s superpower, and their principal enemy was the French
• By 1910 the Brits were allied with France against Germany
• By 1920 the Brits were in a naval arms race against their previous allies, the US and Japan
• By 1930 the Great Depression had taken hold, and no-one was building a navy. Defense planning predicted ‘no war for ten years’
• By 1940 WWII had begun
• By 1950 Britain was no longer the world’s greatest power
• By 1960 few people had heard of Vietnam
• By 1970 Vietnam had come and gone. The US was beginning détente with the Soviets and anointing the Shah in Iran
• By 1980 the Soviets were in Afghanistan, Iran was in revolution, and the US was the world’s greatest creditor
• By 1990 the Soviet Union was within a year of dissolution, the US was the world’s greatest debtor, and almost no-one had heard of the internet
• By 2000 Warsaw was the capital of a NATO nation

The memo ends, ‘All of which is to say that I’m not sure what 2010 will look like, but I’m sure it will be very little like we expect, so we should plan accordingly.’ Five months later, a terrorist cell crashed planes into the Twin Towers and the Pentagon.

Predicting the future is a fool’s errand. If that note had been written today, Covid would feature prominently. But even though the future is hard to predict, you need to prepare for it. While specific developments are as hard to track as a drop of rain in a storm, the wider trends are as navigable as a river.

Here are my thoughts on the top five trends to prepare for over the next few years:

1. Resource Management 

Today’s Millennium workforce wants greater responsibility at an earlier stage. This coincides with tech taking away lots of traditionally repetitive trainee tasks (more on that to follow). All of this means the bottom-heavy ‘pyramid’ model of staffing (i.e., lots of junior staff at the bottom performing simpler, repetitive tasks but decreasing numbers of higher ranking staff as the complexity of the work increases) is on its way out. On its way in is the ‘rocket ship’ resourcing model – narrow at the bottom, bulging in the middle, and narrow again at the top. The use of flexible resources and outsourcing to scale up and down in response to demand keep costs low.

Another emerging trend is tasking the right resource to the right work. Currently, resourcing on matters tends an afterthought. Centralizing resource management is the rarest of things – even though it’s a quadruple-win scenario because it simultaneously benefits partners (it’s one less thing for them to do), clients (who get the best lawyer for the job rather than the last person standing), lawyers (who get more control over their career), and firms (as staffing and budgeting receive increased attention at the start of a matter). That, combined with the multiple additional soft wins (such as blind resourcing assisting diversity, equity, and inclusion), makes centralized resource management certain to become the norm in the near future.

2. Office Space

I’ve had more conversations about the future of the office than any other topic since Coronavirus hit. The pandemic forced the legal industry to move forward by a decade overnight. Lawyers liked what they saw. No more long commutes, no more sleeping in pods, and no drop in productivity. In my view, there’s no going back.

Yet, the future won’t be wholly remote either. The ‘water cooler’ can never be entirely virtual. My company, Elevate, has always encouraged flexible working and now leads the way in how to run a company with a smaller physical footprint. We have great tools that enable everyone to see what everyone else is doing (shout out to Microsoft Teams and 15Five software), plus dedicated People Engagement Directors whose sole focus is to get the best out of our workforce in an increasingly virtual environment. We have offices that will remain an important component of our culture, but like resource management, these are flexible spaces that we can rapidly scale up and down as demand changes.

3. Subscription Pricing and Products

The race has started on digital products, but there’s still plenty to come (and plenty of time to catch up). To get a sense of the scale of change, consider that Gartner predicts 12% of in-house budgets will be devoted to legal tech by 2025, compared with 3.9% in 2020 and 2.6% in 2017.

It’s easy to see what’s driving this. Digital technology is creating a larger playing field for the legal industry. Its quality is increasing while its cost is rapidly decreasing. It’s becoming increasingly common for new market entrants and legacy players to leverage technology to create and capture new value. Clients are also developing consumer-grade expectations of ‘any time, anywhere, my way’. All of which means the industry’s competitive dynamics have changed. Digitally activated competitors are cherry-picking profitable segments of the value chain and creating low-friction customer experiences that challenge legacy operating models. No-one in Silicon Valley ever thinks, ‘I’ve achieved enough; I’m going to stop now.’ The flow (and the progress) is all one way.

4. Personal Assistants to move up the value chain

In the television show ‘Mad Men’, Peggy Olsen was an outlier – the secretary who advanced to success as a fee earner. In the post-Covid world, she will be the norm. As the need for a traditional office-based secretary fades, high-repetition work will be centralized; what’s left will be dealt with by an upskilled executive assistant who tackles operational requirements (e.g., engagement letters, accountancy rules, fee agreements, invoice formalities, etc.). Clifford Chance and Slaughter & May are the early pace setters, seeking to integrate personal assistants further rather than making redundancies. The outlier is Australian firm Hamilton Locke, which gives equity to their PAs (and all employees) to ensure that everyone feels invested in the firm’s success.

5. Shared services

Shared services are common in other professional sectors. Most people now accept that when they call the bank or utility company, they aren’t going to get to speak to someone who lives locally. Yet, in the legal sector, shared service centers are still viewed as cutting edge. This because of:

• scale (law firms aren’t as big as banks),
• reputation (concerns about standards slipping in a shared service center), and
• conservatism (to paraphrase Richard Susskind, it’s hard to persuade a bunch of millionaires that their business model is wrong).

Yet all three of these once formidable barriers are likely to crumble in the post-Covid landscape.  Scale affects how to proceed and whether to build a captive or enter into a partnership, but it doesn’t impact the overall financial attractiveness of getting work done for less. Reputation matters less as more lawyers realize that not everything they do needs to meet a Rolls Royce standard. It’s ok to put some cheaper parts under the bonnet if the outcome is just as good. And conservatism just doesn’t cut it in light of the client demand to deliver more for less.

Conclusion

Almost every decision we make involves forecasts about how the future will unfold. Unfortunately, without a crystal ball, it’s nearly impossible to predict specifics. The answer isn’t to give up and despair. You need to prepare a road map that factors in future trends while embracing ambiguity and flexibility so that you can respond at pace to new trends. It’s hard to start a journey when you don’t know the exact destination. It’s even harder to be the last person in the room.