3 industry trends that may alter the legal landscape

Several articles this week have highlighted changes taking place in the legal industry—changes that will likely affect both the quantity and the quality of work available for law firm attorneys. But they also suggest some opportunities available for those interested in alternatives to the world of BigLaw.

•    Outsourcing is here to stay.
“[The legal] 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.” – The Legal Intelligencer

Discussing the increasing pressure on law firms from LPOs, Edge International consultant Jordan Furlong told The Legal Intelligencer, “Trends come and go all the time. This one I think is here to stay.” While many focus on the outsourcing of services like e-discovery and document review, note that it’s not just litigation practices that face competition. For outsourcing company Pangea3, the “second-biggest revenue driver [after document review] is corporate services, including contract drafting, review and revision; and mergers and acquisitions due diligence.”

(But cf. Peter Kalis of K&L Gates, who thinks LPOs offer little threat to firms like his: “If you, within your platform as a law firm, can localize a lot of back office services and more routine-type services for clients in low-cost venues, you can achieve the same sort of outcome without risking attorney-client privilege, without worrying about transporting certain IP across national lines ... and without having the long-distance management problems that always characterize those sorts of relationships.”)

•    Clients will handle more work in-house.
“Corporate legal departments are apparently more and more telling law firms: Look, forget it, you’re too expensive—we’ll just do the work in-house.” – Corporate Counsel

A survey recently conducted by Hildebrandt Baker Robbins found that corporate law departments decreased their outside counsel spending in 2009 as they have adopted “a wide range of management practices to reduce and control internal and external legal costs.” Similarly, an Altman Weil survey of chief legal officers reports that corporate law departments “are increasingly serious about finding more cost-effective ways to serve their clients.” These methods include alternative fee arrangements as well as keeping more work in-house. Toward that end, more than 40 percent of CLOs indicated that they plan to increase the size of their workforce over the next year.

•    Virtual law firms offer real opportunities.
“We practice just like any small firm would practice,” says Pam Jefcoat, a founder of the virtual law firm Valkyrie Law Group. “It’s just that we don’t have an office.” – Benchers’ Bulletin, The Law Society of British Columbia [hat tip: TechnoLawyer Blog]

Another way clients can save is by turning to alternative legal practices rather than traditional law firms. In addition to secondment-style models like Axiom, in which lawyers work not out of a firm’s brick-and-mortar office but directly for clients on-site, some attorneys are setting up virtual law practices, a “form of eLawyering,” as practitioner Stephanie Kimbro describes it. “Our clients love it,” according to Valkyrie Law Group founder Jefcoat. “[T]hey love it because one of the advantages of no overhead is that we were able to reduce our rates by about 20 percent. … We don’t commute. We don’t have an office, and so our impact on the environment is less.”

The Benchers’ Bulletin highlights other advantages to working from home, as well as some disadvantages, including potential isolation and client confidentiality concerns. (While the publication comes from our neighbors up north, the issues raised are relevant to U.S. lawyers as well.) If setting up a virtual practice has any interest for you, you might check out Kimbro’s Virtual Law Practice website or tune into the Massachusetts Bar Association’s webcast next Thursday, “Delivering Legal Services Online with a Virtual Law Office.”

- posted by vera