“Move fast and break things” is one of the better known corporate mantras. The company which coined it – Facebook – has achieved incredible growth in living by it. It is not the only way for businesses and industries to grow. The legal services industry, worth $650bn globally, continues to grow at 4 to 6 per cent a year. The motto serving law firms is more akin to: “move only as quickly as necessary not to fall behind, and if it doesn’t seem broken there’s no need to fix it”.
There are great examples of innovation and disruption across the legal profession. But being successful in legal services has simply not required firms or practitioners to innovate at a comparable rate of knots to other successful industries, and as a consequence, it has not attracted those most inclined to create or disrupt in order to succeed. Conservatism is a stalwart approach which comes naturally to the industry. It remains tempting to continue to follow this principle, while industries such as financial services are turned on their head by innovation and technology.
The nature of competitive markets is that incumbents don’t control the pace of development in their industries indefinitely. Disruption of markets is going on all of the time largely unimpeded by the preferences of traditional market players. This disruption tends to have emerging technology at its centre. Technology-enabled disruption is considered to have been accelerated, and has certainly been more conspicuous, by the pandemic and the associated lockdown.
A purpose technology has served in countless industries is to shine a light on inefficiencies and offer better, more cost-effective ways of performing tasks and delivering services. End-consumers are generally the beneficiaries, and this fact is the reason those who would suppress progress always lose out in the end.
Though amongst the last out of the gate, legal services will be no different, and the weight of evidence to support this belief has grown substantially even since the turn of this decade. A recent report co-authored by Oxford University’s Said Business School, Thomson Reuters Institute and Georgetown Law on alternative legal services providers, or ALSPs, found that this market is now a $14bn industry and has been growing at an annualised 15% for a number of years. This market is not synonymous with technology but, if legal services can be disaggregated into two parts – legal advisory and legal process – ALSPs generally cater to the process part, using skilled people, technology and automation to do so.
The report concluded that the ALSP market is at the start of a steeper growth trajectory, offering advantages to clients which are perfectly attuned to the current times, and solutions to emerging new client needs such as how to deliver transformational change and how to harness data. Cost pressures together with the acceptance of new ways of working, the normalising of virtual supervision and a distributed workforce all play to the strengths of ALSPs, also mean that corporates now comfortable sending work off-premises.
Running a leading global provider of integrated legal and business services which owns an ALSP, has its centre of gravity in the UK and is listed on the London Stock Exchange, I watch these developments closely and found in the report both reasons for optimism and for concern. Whilst the majority of firms are now utilising ALSPs on clients’ behalf to reduce costs and access specialised expertise, UK-based firms are making use of fewer service lines than their counterparts in the US, Canada and Australia. And for the firms not using ALSPs, the primary reason is a desire to keep hold of the work.
Law firms must not allow themselves to be written out of the equation by burying their heads in the sand. Clients have shown that for reasons of ease and of risk reduction, their preference is to benefit from alternative legal services and technology by instructing law firms to make use of it rather than by going direct to ALSPs. It is imperative that firms don’t give them cause to change their minds.
If the UK’s legal services industry is to continue to be the choice of multinationals and geographically mobile clients, it must ensure it has the best answers to the questions clients of the future will ask.
An efficient and technology-enabled legal services profession will contribute considerably to the goal of making it easy to invest in this country and to choose it as an international base, as legal work is a major cost in market entry. The next Facebook, the next Uber, the next Stripe, will choose where to call home, where to recruit, where to attract funding and where to engage advisers. Our professions, legal services most of all, must ensure they continue to be a point in the UK’s favour when these important choices are made. This will mean moving a little faster than we are used to.