The legal industry is falling apart. Not in the sense pundits meant when they gave that diagnosis in 2008 as firms were hit with the harsh reality of the recession.
Rather, the industry is moving away from a monolithic provider of legal services -- the law firm -- to a fragmented service platform where the competition isn't just a broadening array of law firms, but legal process outsourcers and other non-law firm legal service providers as well. "Law firms are really being circled by these things," consultancy Adam Smith Esq. partner Janet Stanton said.
Firms have to decide where they want to compete and how, and what fits in their business model, she said.
Not only are LPOs and other firms that are adapting their business models a source of increased competition for law firms, Edge International consultant Jordan Furlong said, but so too are clients who are increasingly bringing more work in-house.
"The overall marketplace for legal services is fracturing," Furlong said. "It's unbundling and specialists are emerging. Legal work will go to the provider best designed for that particular work in terms of personnel systems and mindset."
By "mindset," he means firms that focus on doing only the high-end, bet-the-company work and those that do more of the commodity work.
"Law firms are just going to have to decide what kind of work they want to compete for," Furlong said. "Law firms can't be both the bet-the-company law firm and the commodity law firm. I don't think that's sustainable anymore."
Both Furlong and Stanton said there will be a trend toward boutique firms on one end and large, global firms on the other with little in the middle.
The pressures from LPOs are real, they said. Law departments simply have to find ways to get what they need done for less money and they are slowly starting to realize that the quality isn't lost when using an LPO, Furlong said. Both Furlong and Stanton pointed to the increased hiring by many LPOs of seasoned, high-quality attorneys to do this work.
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Source: Law.com
By: Gina Passarella
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