It is an honor indeed to be invited to contribute this guest commentary to the inaugural issue of The Practice. It is fitting that I have been asked to write, because the subject matter—the “more for less” challenge—is one that has preoccupied me for many years.
My interest in this topic was first piqued in 2005 in the course of research into the work and worries of general counsel (GC) in the United Kingdom. Although the economic crisis had not yet engulfed us, senior in-house lawyers were already under pressure at that time to spend less. Lawyers and commentators today are thus wrong when they suppose that the “more for less” phenomenon was born in the recession. Rather, the recession was an accelerator of a pattern that began to take shape a few years before.
In any event, GCs summarize the challenge when they say they are being told to reduce internal headcount and are being asked to pay lower rates to their external law firms, and yet they have more legal and compliance work than in the past. I am frequently told that CEOs are inviting GCs to slash 30 to 50 percent off their legal budgets over the next three to five years. For law firms, this has meant a dramatic shift—from operating in a relatively price-insensitive sellers’ market to competing in a highly price-sensitive buyers’ market. And while my focus here is on major firms and major clients, analogous pressures are at play in the legal affairs of individual consumers and small businesses, not least because of cuts in public legal funding.
Lawyers and commentators today are thus wrong when they suppose that the ‘more for less’ phenomenon was born in the recession. Rather, the recession was an accelerator of a pattern that began to take shape a few years before.
I argue that there are only two responses to the more for less dilemma. The first is what I call the “efficiency strategy,” which involves cutting the costs of legal service. More specifically, I call for the “decomposition” of legal work into component tasks, the more routine and repetitive of which should be undertaken in ways that are much more efficient than the methods of traditional, one-to-one consultative advisers who handcraft and charge by the hour. This leads us into a world of off-shoring, outsourcing, subcontracting, near-shoring, and computerizing the process-based and more administrative work clients are no longer willing to pay to be done by expensive lawyers in expensive buildings. In summary, this is the industrialization, digitization, and commoditization of legal service.
If law firms do not like the efficiency strategy, I expect GCs to default to my alternative—the “collaboration strategy.” In fact, they may embrace this strategy even if firms do come to work differently. Enabled by a range of social media, the collaboration strategy entails clients coming together and sharing the costs of legal services. Unlikely though this may sound, the approach is already gaining traction. If we cannot cut costs, the only way to save is to share the costs. And so, there are major corporations, financial institutions, and public bodies in the United Kingdom and the United States that are exploring ways in which they might isolate common legal and compliance work that is noncompetitive and invite one legal supplier to syndicate its offerings to this community, perhaps working through some low-cost service center.
The efficiency and collaboration strategies sound fairly revolutionary to most conventional legal practitioners. But will we, in consequence, in the words of this magazine (see “The Global Age of More for Less”), witness “a fundamental paradigm shift,” or merely a “temporary correction” in the legal industry? The editors suggest it is too early to tell. I want to be bolder and predict that the “more for less” pressure will combine with a variety of disruptive technologies and with the emergence of new competitors to law firms (whether or not through liberalization) to bring more fundamental change in the legal market in the next decade than we have seen in the last century. If we pause to contemplate the depth of the cost pressures, the profundity of likely technological change, and the hunger of alternative legal providers, it seems to me the least likely of all outcomes that little will change and that the legal profession will emerge unscathed.
Why on earth would clients go back to less efficient, more costly service? Even if they were inclined to time travel back to 2004, their CEOs and stockholders are unlikely to tolerate this. The genie is out of the bottle.
During the economic downturns of the early 1990s and early 2000s, law firms tightened their belts and priced themselves more competitively, but did not change the way they worked. In contrast, this recent recession has spawned alternative ways of sourcing routine work, innovative uses of technology, new entrepreneurial suppliers of services, and different delivery and business models. Clients have benefited from these, or at least have seen clearly what different might look like. By and large, they like what they see: more legal service at less cost. Why on earth would they go back to less efficient, more costly service? And even if they were inclined to time travel back to 2004, their CEOs and stockholders are unlikely to tolerate this. The genie is out of the bottle.
All of that said, I do not expect a “paradigm shift,” a big bang, or our arrival at some “tipping point.” Instead, I predict what I call an “incremental transformation”—a series of assuredly great shifts and innovations, none of which on its own will be revolutionary but, in combination over the next decade, will bring fundamental, irreversible, and pervasive change to the world of law.
Richard Susskind is the author of The End of Lawyers? and Tomorrow’s Lawyers. He is IT Adviser to the Lord Chief Justice of England and holds professorships at UCL, Gresham College, London, and the University of Strathclyde in Glasgow.