Last week the Times Online published Eversheds report looks at how ‘perfect storm’ will affect the legal profession (18 Mar 2010), which provided an advance look at “Law firm of the 21st century – The clients: revolution – An Eversheds report on the post-recession legal sector in 2010”. The report, due for general release on March 22, is a fascinating read – bad news for Big Law but good news for legal tech managers and outsourcers. 

Eversheds bases its report on a survey of 130 general counsel and 80 law firm partners about the state and future of the legal market. The firm concludes that “the revolution has now arrived”. And it is not a good one for Big Law. Interestingly, Evershed’s research finds that the recession was not so much the driver of change as the catalyst for it. Driving the change are four secular trends:
• globalisation – the move to the East
• increasing professionalism and status of the General Counsel
• technology
• the Legal Services Act in the UK.

The report is definitely worth reading; request Law firm of the 21st century at the Eversheds website.

It has so much interesting data and so many jarring conclusions that summarizing it is hard. Many conclusions will provoke discussion, for example, that the biggest firms need to reduce headcount and leverage, the hourly rate is “almost dead” in the UK, and that the balance of power has shifted to clients.

Given my interests, I will focus on the conclusion that “strategic resourcing through outsourcing and technology dramatically increased”. I have previously argued that a new focus on efficiency will be good for legal technology. The report concludes:

“On the technology side, a significant proportion of law firm clients and managing partners reported greater use and investment in technology. Over half of law firm clients interviewed (58%) had used technology to deliver legal services more efficiently as a result of the recession. A third of managing partners were actively investing in technology to either standardise legal processes or communicate more effectively within the firm and with their clients.”

Personally, I am skeptical that so many firms have done so much with technology during the recession but, at minimum, this reflects a change in attitude.

It has also become apparent that the recession will further drive legal process outsourcing penetration. (My day job is with LPO Integreon so you know my potential biases.) A 2008 survey found that 49% of GC would outsource (see my Integreon blog post, Survey Suggests US LPO Spending of $2 Billion by 2013). Less than two years later, Eversheds found that

“Just over a third (38%) of General Counsel were actively implementing or considering outsourcing low-level work to low cost jurisdictions and a further 29% were receptive to the idea of outsourcing provided they had suitable work.”

That is 66% of clients outsourcing or open to outsourcing, a substantial increase since the last survey. On the law firm side, the report finds that outsourcing will contribute to large firms having excess real estate for years because both legal and administrative work will be outsourced (and leases are long term so adjusting short term is very hard).

Spring has sprung in my home town of Washington, DC. And change is in the air. The Eversheds report is just one sign, albeit a well-researched and compelling one. I expect to hear more about change starting tonight as I attend Georgetown Law’s Law Firm Evolution: Brave New World or Business as Usual?. I hope to live blog the panels on Monday and Tuesday.