Legal Services “Big Bang”

In the January issue of the Edge International Communiqué, Edge partner Chris Bullhas written an insightful article on “Legal Services “Big Bang:” A brief history of how we got here”, where describes how the global legal market is in the early stages of its own version of “big bang,” creating a constellation of different structures and models for providing legal services. He also tells the interesting story of how we got here.

As Chris Bull explains, “the marketplace is witnessing a shift in the way legal services are delivered and organized, replacing a structure that has survived for decades: lawyers structured as partnerships, working from their own offices and delivering services face to face with, only fairly recently, a modest amount of technology support. The story of “how we got here” is complex but some immediate triggers – or “accelerators” – have ignited deeper, tectonic shifts. This is not some short-term response to the global economic malaise but deeper and more structural and, therefore, more permanent. The drivers are rooted in economic and societal changes that have affected every part of our world but have been slow to make their impact felt in the legal market. Included are some of the basic trends from “The World is Flat,” the advent of the internet, the globalization of services and access to powerful personal computing tools. But, we have barely begun to appreciate how they will transform the legal services sector of the business world.”

Chris Bull identifies the following main accelerators for the game-changing shift:

“That powerful shock – the primary “accelerator” that has created this watershed shift – has been the deep and sustained economic crisis that has arrested the seemingly inexorable growth in demand for and profitability of law firms. According to Citi Private Bank LawWatch survey data the crisis has triggered the first net reduction in demand for legal services in recent memory (2008/2009).

A secondary accelerator has also been at work for the last five years as regulators in some jurisdictions (initially in Australia but most notably in the globally influential UK market) have announced and begun to enact legislation that will open up the legal market to external (non-lawyer) investment, ownership and competition. These regulatory changes are a second fundamental accelerator of change for the entire global legal market, as they will influence activity and decisions far beyond the shores of the UK and Australia. However, the really interesting and significant fact here is that deregulation has stimulated the creation of a host of new business models in anticipation of enactment. The extended period since the UK government initiated the Clementi review into legal services and then passed the Legal Services Act 2007 has provided fertile ground for the development of new models. These have begun to emerge and operate in spite of the delay in getting to the ultimate “pay-off'”moment when the licensing of Alternative Business Structures (ABS) with external ownership begins, something we now expect in early 2012.”