Even the greatest industry troglodytes recognise that the confluence of market forces and technology is driving the most profound transformation The Law has ever seen.
Plexus is increasingly seen as the vanguard of this change, hence we are often asked to interpret the industry tealeaves by clients, the media and industry groups.
Unlike its more reliable cousin hindsight, foresight is rarely 20:20. However as the ominous date 2020 approaches there are some prevalent trends that will be game changers. Here are five that our research suggests will have a disproportional impact on Legal:
1. Faster, Better & Cheaper
Perhaps the most dominant ongoing shift will be an irreversible move towards demand for legal services that are faster, better and cheaper. In fact, recent research is contrary to conventional wisdom: clients prioritise faster and cheaper over better – Only 26% of business partners agree or strongly agree with the statement: “The services provided by my legal team were of sufficient value to my department to justify the time and resources we spent.”
This shift will increase the power of procurement in the legal buying process; it will devalue ‘relationships’ as the dominant procurement criterion and provide stiff headwinds for those providers at the ‘premium’ end of the spectrum.
Ever since the industrial revolution, innovation has outpaced evolution exponentially. As a result, our brain’s competitive advantage diminishes each year.
2. Down Tiering: ‘Big Law’ Won’t Die but It Will Fade Out
As economic pressures force large clients of traditional law firms to shift from ‘premium’ to ‘value’ orientation, GCs will increasingly move their ‘share of wallet’ to alternate legal providers such as Plexus, innovative technologies (such as our pLEXlogic automation tools), and value-centric traditional service providers (such a ‘boutiques’).
Big firms will come under increasing pressure to tangibly demonstrate that ‘bigger is better’ through economies of scale, cross-practice synergies and/or value enhancements. The likely outcome will be splintering of these firms into ‘super-premium mid-tiers’ and more traditional boutiques providing high-margin advice on the pointiest areas of the law.
The enormous partner departures at top-tier firms in recent years suggest that this trend is already well advanced.
Interestingly, this is merely a reversal of a previous cycle: In 1970 the largest firm in the world (Shearman & Sterling) had just 164 lawyers. At 4000+ Baker & McKenzie has a long way to fall.
3. The Technology Revolution
It was almost 20 years ago that New York Times columnist Thomas Friedman reported that the Lexus car plant in Japan turned out 675 cars per day with only 40 employees. Yet some legal industry participants hold out air-conditioning and word-processing as this industry’s greatest technological enhancements.
Bleeding-edge solutions such as our new Trade Promotions Wizard demonstrate that legal tasks can be performed by technology in a sliver of the time and a fraction of the cost of traditional methods, unlocking tremendous value for clients while unshackling lawyers from the drudgery of low-level tasks.
Our experience suggests that technology not only improves speed and cost. It will bring enormous enhancements to the ‘long tail’ of the contract lifecycle. Legal functions will, for the first time, be able to harness Legal’s equivalent of ‘Big Data’; bringing unprecedented transparency to the risk and value trapped in the millions of agreements a business signs each year.
Ever since the industrial revolution, innovation has outpaced evolution exponentially. As a result, our brain’s competitive advantage diminishes each year. Legal may be the last profession to recognise and profit from this.
4. The Move to ‘Just-in-Time Talent’
As the loyal and risk-averse baby boomers transition out of the workforce, ‘employment mobility’ will become an increasing threat and opportunity for both employees and businesses. Businesses will leverage this trend to bridge the capability (skill) and capacity (volume) gaps they encounter across the year – reducing their dependence on law firms in the process. Employees, on the other hand, will look for more diverse career experiences, greater flexibility and work-life balance.
Like the down-tiering of big law firms, this trend is already well advanced. Over half of the top 100 organisations in Australia have used our lawyers to ‘insource’ litigation, M&A, compliance projects and the like to deliver more commercial, responsive and cost-effective support to the business.
5. The Rise of Information Governance
We are entering The Cambrian Period of corporate data. It is forecast that corporate information will rise from .7 of a zettabyte to 20 zettabytes in the next five years. This deluge of data comes intertwined with a regulatory tsunami that will multiply the risk to organisations on the accumulation, use and control of data.
One speculative prediction is that, as Boards seek to navigate this jumble of data and regulations (along with the criminal and civil penalties that come with them), the GC role will morph into an information governance role – which few, if any, are currently tooled up to manage.
You could have a party in a phone booth and still have room for the band with the amount of lawyers who don’t recognise change is afoot. The next five years will provide both opportunities and threats. Yet we are incredibly bullish that, for those who adapt, this new era will be incredibly positive for lawyers and clients alike. As the proverb goes, “you can’t change the wind but you can trim your sails”.