Big Law Changing or Being Disrupted?
The legal market has seen a running debate since the economic crash: is Big Law being disrupted? My short answer is no, it’s only changing.
It’s not the three conferences in February alone on this question that prompt me to write today. Rather, it’s the appearance in one week of two good articles on the topic. Plus that I’ve been thinking about this to prepare for a panel, Legal Industry at its Inflection Point: The Time for Innovation is Now!, that I’m on at the International Legal Technology Association annual conference.
I’ll reference the articles, then share where I come out on the debate. Perhaps most prominently, the lead August American Lawyer Magazine article is the Future of Law. It’s an in-depth and by-and-large balanced piece on the debate. Read it for a good summary of key developments and trends and a mix of views. (The opening really stands out for me because I learned that IBM Watson now “synthesizes information to develop arguments on different sides of an issue”.)
Today, Paul Lippe of Legal Onramp has an ABA Journal column called Disruption, eruption or interruption: 3 views of change in law. He suggests that “[i]nstead of Disruption, I’ll argue that what we’re seeing today is Eruption”. I’m not sure I like “eruption” but I do agree with his point that in-house counsel are leading many valuable initiatives to reduce legal costs.
My view is that disruption is the wrong way to think about legal market trends. I see a nice future for many large law firms, at least those willing to change a bit. Here’s why I say that:
- We are six years past the economic crisis and probably four years into the shift of power to clients. We now understand what that means and it’s not the end.
- Demand is flat but most US large firms continue perform fairly well. While some firms do suffer, many thrive.
- A favorite among the disruption school is alternative legal services providers. Data are scarce but.. Excluding managed document review, a reasonably large business in the US, non-law-firm-alternatives to Big Law have probably taken less than 1% of the market. It might go up but it does not feel like disruption to me.
- Consider two poster children of change or disruption – take your pick. Clearspire is no more. Axiom Law has long reported the number of lawyers it has on one of its pages. For many months, if not more, that number stands at 1000 lawyers. Maybe they are growing and just not updating their website; I don’t know.
- More importantly, Big Law is changing….
It seems clear that the rate of change in Big Law has picked up since the crash. For excellent evidence of that, see a blog post today by Patrick Johansen, Chronological Roll Call Reveals Steep Trend; it shows the very steep rise in pricing professionals in large US law firms. I’m guessing that the number of folks doing legal project management has increased at a similar clip.
Pricing and LPM are not the only changes. Many law firms have opened low cost service centers. While I think this trend has some problems (in my view, outsourcing makes more sense), it does illustrate that many firms see the need to change.
Some may say this debate does not matter. I think it matters in at least one important way: how to talk to partners in large law firms. Much of my consulting is change management. I find that change is hard no matter what, but it is actually harder with partners if I talk about disruption rather than simply describe the changes taking place. And there are plenty of changes to talk about.
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