Report on what’s hot and not in the legal profession

Twice a year, Robert W. Denny of Robert Denny Associates Inc., provides a report on “What’s Hot and What’s Not in the Legal Profession”. In a recent article in The Legal Intelligencer Robert W. Denny makes a special update on the current ongoing changes since the year-end report last December. Some of the major trends identified in this special update are

  • Outsourcing
  • Social Media
  • Alternative Fee Arrangements
  • Strategic Planning and Firm Management
  • Lateral entries

A clear trend noted in the Denny report is that outsourcing has now expanded beyond just basic work to India, with examples such as CMS Cameron McKenna’s outsourcing of almost all support functions to Integreon, reducing their support staff by 90 per cent.

When this deal was made public last year, it was stated to be a game changer and CMS Cameron McKenna’s managing partner Duncan Weston said in The Lawyer article “Cameron outsources all support services in £600m deal” that “It’s one of the core pillars of our strategy. We hope that this is something that transforms the sector. The difference with this is that we’re the first firm to market a complete service platform for the industry.”  Another interesting article that is recommended to read on this topic is the Bukisa article  “Cms Cameron Mckenna – Integreon Deal, a Bellwether For Lpo?”, which discuss the concepts of Legal Process Outsourcing (LPO) and Business Process Outsourcing (BPO) and the potential herald of a new “lean law firm” model, where everything that is billed is part of law firm and everything that is not is not. Certainly an interesting question to follow up on.

Another example of the expansion of LPO is the establishment of providers of “lawyer-for-hire” like Axiom Global, which has recently purchased another legal staffing company.

Jordan Furlong of Law21 has in his 2010 year end summary “So what happens next?”commented on this trend as “the protective shell of the legal profession has cracked. Lawyers in law firms are no longer the sole option for legal service purchasers and they will never be again. But this is only the start of the voyage, not the end of it, and nobody owns a reliable map. I know where I think we’re headed: multiple service providers, including law firms, virtual lawyers networks, LPOs and automated systems.”

In the Denny report social media, and particularly Facebook, LinkedIn and Twitter, are noted as hot areas for marketing, even though the results from social media are mixed in many law firms. Firms have also started to realize the need for development of electronic and social media policies. A new specific increase in this area has occurred in online video marketing, which reportedly is “three times more likely to increase the conversation of a viewer into a potential client and is projected to grow 34 per cent every year through 2014”.

Regarding Alternative Fee Arrangements it its reported that they are “increasing, mostly in the form of fixed or capped fees. But that many general counsels are still are not raising the issue and most law firms, even if willing to discuss AFAs, are not raising it either. What is lost in all the discussions about valaue – and how to define it – are two other issues that are important to most clients: transparency, which hourly billing provides, and predictability, which fixed or capped fees provide.”

Due to the economic down turn many law firms abandoned strategic planning for “survival planning”, but according to the Denny report many of this firms are “either updating their strategic plans or developing new ones”. A related issue that is stated not to b a trend, since the same result was reported 15 years ago, is however that “over 70 per cent of the responding managing partners do not have a job description and most partners do not know what their managing partner does”.

Reportedly, “BigLaw firms and even some larger MidLaw ones have now sharply reduced their lateral hiring unless they have a need in a particular practice area or industry. However, because of increased hourly rates and the resulting loss of clients, as well as increased billable hour requirements, experienced partners continue to leave large firms to join mid-sized and even small firms”.

This is a trend that we see also in Scandinavia, with an increased establishment of new mid-sized more specialized, boutique or quality focused firms, providing a competition not to underrate for the large law firms.

The full December-report from RobertDenny Associates can be found here: “22ndAnnual Report on What’s Hot and What’s Not in the Legal Profession”.