11 June 2018

Existential crisis facing the legal profession

Becoming a partner is not the purpose that will motivate many lawyers for much longer, says Andy Milligan of the Caffeine Partnership. Doing something they believe in and in a way that benefits the world and suits them is a more sustainable solution.

I recently spoke with an international group of leading law firms about the existential crisis facing the legal profession. It seems to have three main factors and one big cause. Firstly,  BigLaw is being challenged by the Big 4. Where legal advice affects business operations and decision-making, the Big 4 consultancies are muscling in on the action. PwC Legal for example, has over 8,000 lawyers and will likely look to generate $1bn in revenues soon. The Big 4 are already plugged into boardrooms, embedded in business processes that are critical to the governance of a business and are naturally fluent in the language of business. 

New Tech

Secondly, new technology is driving a commoditisation of the services on which law firms have relied for years both to sustain fees and as a training ground for new lawyers. Decisions which relate to compliance with law and are effectively binary (yes or no), can be made by paralegals from a computer. Soon, they will be made by the computer. 

Changing mindsets

Thirdly, the mindset of lawyers is changing. More people are questioning why they should spend their lives working 12 hour days, locked in airless rooms, arguing over legal abstractions, often with people they dislike intensely, in the hope that one day they might become a partner. It’s not the attraction it once might have been. Many are leaving law firms to become in-house counsel, or are joining the ‘gig economy’, becoming freelancers for firms such as LawyersDirect. Or they are quitting the law profession altogether. The supply chain, as it were, for legal firms is under threat.

Existential crisis

The one big cause behind all this is the combination of technological and social changes that have occurred over the last 10-15 years. These changes are driving greater transparency and accountability regarding fee structures and performance, putting pressure on pricing. They are affecting how people want to and can work and are risking a talent drain. They are changing what a law firm is. So how to address this existential crisis?  Here are two answers. One is strategic, one is also existential.

Strategy

The strategic answer is to choose between 3 options:

1. Go big. If the Big 4 are muscling in, then one strategy is to get bigger. Big law firms are nowhere near as global as the Big 4 consultancies. They may have a few centres of excellence and then a patchier international offering. By consolidating – merging or acquiring – they can scale up to the size they need, and the scope required for big global mandates.

2. Become a trusted business advisor. If there’s little value in the procedural and compliance law work, then the money might be made in positioning your legal expertise as business critical advice. In a world where the source of value is ideas, innovation and technology, which are all underpinned by legal rights, then understanding the law becomes vital to business. In sports, entertainment, leisure, technology, knowing what you can do legally and what your business strategy should be, is intertwined. It’s no surprise that one of the biggest sports and entertainment agencies, IMG, was established by a lawyer, Mark McCormack.

3. Adopt agility. If you can’t go big and if you lack the desire to be a business advisor, then focusing on an agile business model is probably the best bet. Respond swiftly, economically and effectively to clients’ needs, using technology that allows flexibility for your firm and your employees. Lewis Silkin one of the UK’s top law firms has created Rockhopper, a dedicated employment law business which offers speedy advice from highly qualified lawyers by phone or web, cost-effectively. It has grown quickly and has enhanced not cannibalized the overall law firm’s business. It’s worth noting that PwC are also thinking on these lines by launching its Flexible Legal Resources.

Of course if you can do all three, then the future may well be yours to own. But that would take a very special kind of law firm.

Greater sense of purpose

The second answer underpins any of the 3 choices above. It’s the existential one. Why are you here anyway? Law firms must discover (or rediscover) and articulate a greater sense of purpose than making more partners more wealthy. That purpose needs to connect with an ethos about the law and with a sense of contribution to society that being part of a law firm could make. Above all, it must be translated into ‘hard practices’: tough choices about what type of work the firm does, who it will and will not work for, humane, fair and equal ways of working and where and how it invests the money it makes. It’s not a CSR programme. It’s a company’s cause and culture.

Motivation

My biggest lesson from talking with those highly talented law firms is this: becoming a partner is not the purpose that will motivate many lawyers for much longer. Doing something they believe in and in a way that benefits the world and suits them, that’s the purpose they will seek. That’s what law firms must practice.