a traditional company might, nor do they traditionally
have research and development departments. It’s not a
setup that he feels is particularly conducive to managing
or addressing disruption.
“A law firm will have to be open to a completely new model
for how it provides services, how it charges for those services
and then how it researches what kind of services it innovates
and then provides to the customer base,” Johnson says.
A WHOLE NEW WORLD
To be sure, creating a completely new model for the
delivery of legal services frankly sounds like a lot of work.
But Is the effort worth it? Legal advice
has long remained the bread and butter of the law firm model, and wandering too far from home—i.e., doubling
down on tech subsidiaries or other
high-profile forays into innovation—is
an expensive gamble.
But money, or the promise of money,
has a way of making people bold, and law
firm leadership may be well on their way
to viewing tech-based tools or services as
the meal ticket of the future. According
to Abramowitz, partners are cognizant
that labs and subsidiaries are not yet in
the position to generate the same level
of revenue as their traditional business
propositions. Instead, consider them to
be the beginning of one long pivot.
Abramowitz hears this from those
in the industry: “We recognize that our
law firm makes money one way and we
recognize that we’re going to need to start making money
another way, and this is really our first step in that direction.”
Just how successful law firms will be in those endeavors
will likely depend on the solutions they elect to target. Dewey
expects more and more law firms to continue to build inter-
nal development teams, but he wouldn’t recommend them
attempting to dip a toe into tech-heavy lifts such as contract
management software since there are specialized legal tech
companies on the market who are in a stronger market posi-
tion to meet those needs. Instead, he recommends that firms
concentrate on new and efficient ways to deliver their preex-
isting subject matter expertise.
“Those are areas where in some cases law firms may be in a
better position than outside non-law firm vendors or companies to provide that or develop that technology. And you probably see that in areas like machine learning where you may
need subject matter experts to train or facilitate the training of
the models to perform the tasks that are needed,” Dewey says.
However, Catherine Moynihan, associate vice president
of legal management services at the Association of Corporate
Counsel, believes law firms may be at a disadvantage because
some of their home-grown tools either never leave the confines
of the lab or are siloed inside a single practice area. “The really
cool work that’s being done in that subsidiary or lab isn’t nec-
essarily being imbued into the whole law firm where the core
practice of law is occurring, so I think the jury is still out whether
that’s an approach that clients will appreciate,” she explains.
NEW FRIENDS AND FOES
Of course, not every law firm can afford a major overhaul. Even
if ownership and investment restrictions loosen, some smaller
to midsize firms may simply lack the budget or experiences
necessary to appeal to new investors or self-propel their own
technological revolution. Luckily, corporate clients may have
inadvertently been laying the foundation for the partnerships
that will allow such firms to remain competitive.
Moynihan noted a distinctive shift
that has emerged in the relationship
between firms and ALSPs. A pairing that
once upon a time might have been the
product of a corporate mandate is now
self-actualizing as law offices look for
cost-effective ways to leverage the technological efficiencies clients demanding.
“They’ve already got those embedded relationships instead of having
them imposed on them by a client,”
The appeal of that arrangement?
Linking arms with an ALSP is a quick
way for a law firm to add much needed
scale and expertise to their operation.
Some are able to leverage the experience
and insights they gain from working with
an outside provider to eventually replicate the service in-house—which should
be the ultimate goal.
But it’s hard to make an omelet without breaking a few
eggs, or in this case making a few enemies. As law firms look
for ways to boost their technological services, loosening
ownership and investment restrictions could eventually place
them into direct competition with the Big Four.
Dewey of Holland & Knight spoke to a colleague
employed at a U.K.-based law firm who told him that their
cyber unit—which handles everything from system review
to post-breach investigation work—had found their biggest
competitor in the Big Four as its work grows increasingly
independent of the firm’s lawyers. “I think that will be a trend
as well moving forward,” Dewey says.
Johnson at Parsons Behle theorized that the Big Four
and other legal service providers may begin picking off some
of the run-of-the-mill, straightforward legal work that has
served as law firms’ primary source of income. Instead, firms
will have to double-down on the sort of high level, intricate
matters that other providers will be reluctant to touch.
“I think opening up those ownership rules is going to
create competition that I don’t think law firms are ready
for—and how could they be?” Johnson says.
Frank Ready is a reporter on the tech desk at ALM Media. He can
be reached at firstname.lastname@example.org.
CORPCOUNSEL.COM ❘ APRIL 2020 41
Zach Abramowitz, an analyst and consul-
tant in the legal technology space.