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LAW FIRM LPO: An Introduction to Global-wide

Contributors:
Ganesh Natarajan
DWF Mindcrest (DWF)
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Current economic conditions affecting the legal profession

The COVID-19 pandemic brought the world to a standstill. Now, more than a year and a half later, the pandemic has pervaded every aspect of the world’s affairs and will continue to for the foreseeable future. In some parts of the world, access to vaccines has allowed sectors to open up and has allowed citizens to slowly return to a sense of normalcy. Other parts of the world have seen immense surges in cases with limited vaccine availability unable to outpace the spread of the virus. The loss of human life during the past year and a half has been devastating with more than 3.3 million people dead. For many, there will not be a return to the “normal” the world knew in 2019, rather the world will emerge into a “new normal,” and the emergence from the shadow of the pandemic will not be linear.

Taking the world economy as a whole into account, forecasts are improving. Revised estimates by the IMF project a 6% global economic growth in 2021 followed by another 4.4% increase in 2022. Following a year that saw the global economy shrink by 4.4%, this seems like good news. However, global recovery is not linear, nor is it simple. Imbalances in vaccine distribution mean some nations will recover slower. Global trade, which many businesses depend on, is disrupted by these imbalances. Furthermore, many businesses and industries suffered severe losses, leading to layoffs and closures. Until there is equitable distribution of vaccines, the pandemic will continue to play a role in the day-to-day lives of most of the world.

Broadly speaking, companies are rethinking their business and operating models. Is it necessary to have as many physical offices? How do global companies manage offices in various states of re-opening? Is the go-to-market strategy nimble and flexible enough to adjust to severe external shocks? With a more agile workforce, how does a company train, develop and retain its employees when their physical location does not matter? Each company will grapple with these issues, come to their own conclusions and take appropriate action. The winners will be those that can think through all of these issues and develop and execute finely calibrated plans.

What does all of this mean to the legal business?

The legal business is dominated by four sets of players: law schools, in-house legal departments, law firms and alternative legal services providers (ALSPs). The walls that exist between these legal departments, law firms and ALSPs will become porous, with work flowing between and among these groups in a seamless manner. Distinctions between in-sourcing and out-sourcing will diminish. Technology development through the use of AI tools will accelerate and will be deployed with greater urgency. However, at the front end of the legal profession, law schools will undergo significant changes affecting the supply of lawyers.

Law Schools 

Before COVID-19, could we have imagined the level to which American higher education would be conducted through online courses? Law schools long resisted online courses as not being conducive to the Socratic method of teaching, but had to pivot quickly to remote learning at the onset of the pandemic. Technological networks held and education was able to continue in a remote setting. However, remote learning presents its own challenges, such as decreased social interaction and fewer networking opportunities. As well, law schools have built fancy brick and mortar buildings and must recoup these investments through fees charged to students. However, the higher education market going forward may tilt towards remote learning. In that case, will students pay those high fees if they do not benefit from in-person amenities? Will this result in winner and loser law schools and reduce the number of lawyers entering the system with significant downstream repercussions?

Legal Departments 

The pandemic exposed existential threats to all economic activity. Legal departments have been front and centre in dealing with the pandemic threats that continue today. The company will place greater burdens on legal departments to prepare and plan for such threats in the future, including future waves of COVID-19. Legal departments must look at their supply chain in imaginative ways. In the past, in the face of such threats, law departments have taken baby steps. Now is the time to be bold and imaginative. Knee-jerk resistance to technology must change to a judicious embrace of technology. Agile companies will respond to this new normal by inventing better AI tools and processes. The pandemic has also allowed law departments the flexibility to utilize these tools across the entire supply chain. Legal departments should deploy these new generation tools to get rid of an exclusionary mentality and demand collaboration between legal departments, law firms, and ALSPs in a seamless manner.

Law Firms 

The vast majority of law firms are still stuck with the partnership model. Given the new normal brought on by the virus, law firms should begin to move away from the partnership model. While legal expertise and a brand name will continue to help law firms at the top of their respective markets, the pendulum is swinging towards the delivery management of legal services. Instead of paying lip service, law firms should embrace technology. Of course, technology cannot supplant legal expertise, but it does make it easier to access legal expertise and help deliver the work much more productively and cost-effectively. Legal departments are already encouraging greater collaboration between law firms and ALSPs and will demand such collaborations in the future.

Alternative Legal Services Providers 

ALSPs with global footprints, significant technology, strong project management and sound people management capabilities will become key players in the future. By providing enterprise level service and working collaboratively with legal departments and law firms, ALSPs are changing how legal work gets done in a more efficient manner. The success of individual ALSPs will depend on how they execute on a daily basis. The pressure on ALSPs to embrace and showcase technology will be acute as technology is an integral selling point of the ALSP model. Also, strong people management is critical for ALSPs where teams are working in hybrid remote models, especially as ALSPs are held to more stringent SLAs than their law firm counterparts.

Conclusion 

COVID–19 permeated every corner of the Earth and disrupted our lives completely. It created an economic onslaught on our very existence. The recovery is slow and uneven. Companies have been forced to rethink their business models or face the prospect of going out of business. The legal business will not be immune from these pressures and will face a greater burden as the key player in protecting the company from threats. This means that legal departments, law firms and ALSPs will be forced to change and embrace technology, discard barriers between in-sourcing and out-sourcing, abandon geographic barriers and work collaboratively.

Until enough vaccines have been distributed, COVID-19 will continue to haunt us. Therefore, the ability to adjust to unbalanced recoveries in an uncertain marketplace will pose the greatest challenge to businesses across industries.

By Ganesh Natarajan, President, Mindcrest