If one sentence could sum up legal practice in the English-speaking world this year, it would be this quote from The Leopard by the Sicilian novelist Giuseppe Tomaso di Lampedusa: “If we want things to stay as they are, things will have to change.” On the surface, most things looked the same; law firms still exist, as do their clients and client legal departments.
But below that deceptive calm, everything is indeed changing. Technology is transforming how litigation and contracts are done. Law firms, at least the forward-thinking firms who are attuned to the changes, are offering new services. Newer players, like those service providers, are edging closer toward legal practices, while other entrants, like the Big Four accounting firms, are becoming big players in the legal market as well. And all of this is playing out under the shadow of political uncertainty, between the trade wars initiated by the Trump Administration, and the so-far delayed Brexit by Great Britain. And we almost forgot to mention ongoing legislative efforts to protect data privacy and rein in the tech giants’ use of consumer data.
All of this in coming together under the umbrella of legal operations. At first “legal ops” were the province of a few lawyers who have a talent for math and were obsessed with trimming legal spending. Doing so was often a corporate imperative, but it also showed C-suite executives that the lawyers down the hall also understood the business and the eternal need to do more work efficiently. Now, legal ops have turned into a sub-industry, with a large professional organization and industry stars on the conference circuit. Legal ops have reached the point that having an ops group in the department is a best practice.
We’ve thought about what we’ve done this year and talked to the experts. Let’s take a closer look at what the year has brought us:
Politics and their consequences: Companies are struggling to figure out what Brexit, Great Britain’s exit from the European Union, means for them. Their lawyers have to look at their labor force in Britain to see whether and how current EU citizens from other nations can continue to work in the UK, or whether they need to be relocated. The main consequence for legal departments and outside counsel? A bigger workload, says Rees Morrison, the principal of General Counsel Metrics in Princeton, New Jersey.
In the United States, consumers advocates are calling for greater data protection akin to the EU’s General Data Protection Regulation (GDPR). So far, only California has answered the call with similar legislation, the California Consumer Privacy Act, which takes effect on New Year’s Day. And Microsoft recently announced that because of California’s influence and the CCPA, it will extend data privacy protections to all 50 states in the US.
New players, new roles: Alternative legal service providers such as Axiom and UnitedLex continue to make inroads into the legal market, performing tasks and taking on roles once exclusively performed by law firms and legal departments. But the real challenge to the traditional players comes from the Big Four accounting firms, which combine not only the tech capabilities of the UnitedLex type supplier, but also the business knowledge and accounting chops. An all-in-one kind of service, in other words. Thomson Reuters reports that 23 percent of large law firms say that they have competed and lost business to the Big Four in the past year.
“The Big Four and managed practices, law companies, financed tech ventures, cost center-based businesses all are moving into and up the ladder in the market.”
“The Big Four and managed practices, law companies, financed tech ventures, cost center-based businesses all are moving into and up the ladder in the market,” says Susan Hackett, CEO of Legal Executive Leadership, LLC, and the former general counsel of the Association of Corporate Counsel. “It’s at the expense of the traditional practices.” These newer entities are leading to a change in state lawyer licensing, too, she says, allowing these hybrid forms of companies and practices to practice law.
Tech that thinks–the AI revolution. Technology has played a major role in how legal departments have advanced and taken over functions they once farmed out to outside law firms. Electronic billing, for example, gave them access to law firm data about who staffed their matters and how much they were being charged for each function and service, practically down to the last pencil and legal pad.
“Technology is transforming how litigation and contracts are done. Law firms, at least the forward-thinking firms who are attuned to the changes, are offering new services.”
In 2019, another revolution really got serious, supplied by advances in artificial intelligence (AI), or machine learning. Instead of sifting through litigation discovery documents by using key words, AI permits researchers to query batches of documents using natural languages. Why are legal departments keen to do this? AI holds out the promise of doing repetitive chores faster, and cheaper. It also has the potential to reduce head count, either of law firm associates, or of legal services providers who provide electronic discovery support.
It all sounds easy, but there is a downside. Any decent AI function takes months to learn how to think. Users and consultants have to painstakingly enter terms and work through tests before the system can do what the department or firm wants it to do. “Law departments are realizing that machine learning algorithms are far from the Holy Grail as had been promised,” says consultant Morrison. “The overhyped market for “legal AI” may be cooling as reality sets in.”
The Ops transformation continues: This is a continuing trend, and in 2019 there was no stopping it. More corporate legal departments hired legal operations professionals. The membership of CLOC, the Corporate Legal Operations Consortium, now stands at 2,300. And in a controversial move this past summer, the group permitted professionals from law firms to join; previously, membership was limited to corporate legal departments
Law firms have been trying to better market their services to clients. The UK firm Eversheds, for example, conducts get-togethers around the globe for general counsel to exchange views, and it also provides training and support for legal departments. But the megafirm Baker & McKenzie went one step further, poaching longtime operations guru David Cambria from his post at the food company Archer Daniel Midlands last year. This year, the firm promoted him to head of services, where he presides over more than 600 professionals.
Veteran ops lawyers welcome opening up their profession to other disciplines. “We’re starting to see a community of legal ops people developing across tech commercial/vendor management and project management,” says Neil Wilson, BT’s head of legal vendor management. “Some of these roles are being undertaken by lawyers (which is often wrong in my view as the behaviours and skill sets are very different) but there are also plenty of nonlawyers coming to the fore. The in-house function,” he continues, “needs these people in order to evolve.”
“We’re starting to see a community of legal ops people developing across tech commercial/vendor management and project management.”
Wilson’s statement probably applies to the legal profession as a whole, and in-house departments in particular. And it pretty sums up what 2019 was all about, a profession that looked deceptively the same from the outside but is undergoing vast changes beneath the surface in an effort to survive and prosper.