BigLaw’s Big Changes
Vast, global law firms, with upwards of 1000 partners and thousands of staff in cities around the world, have been a feature of the legal scene for years. After a tough global recession in 2008, these businesses bounced back, continuing to expand, acquire or partner with firms in every corner of the globe. But the more reach you have, the more complex it becomes to manage the firm’s finances, culture and clients.
Now, the global pandemic is denting firms’ ambitions for cross-border dominance. Other industries, such as the car industry, have embraced cooperation, rather than acquisition. Will BigLaw of the future spurn M&A in favour of a new model of collaboration? Ten years hence, will BigLaw exist or could there be a new ecosystem of law firms?
Historically, law firms have grown substantially by globalising their offer to clients. Ordinarily, a global footprint was achieved either by setting up from scratch in markets around the world or by joining forces with or acquiring local firms in different jurisdictions. As an inhabitant of the latter camp, I am, of course, a proponent of the organisational model, which means you enter a market at a higher level, given the partner firm has already established an offer and reputation among client buyers. But for many years, the merits of each model have been debated and examples of successful global firms may be found in both categories.
Due to this global growth, the concept of BigLaw was created and with it came continued expansion and big profits. That was until the Global Financial Crisis of 2008, which was a pivotal moment for law firms, just as it was for our clients. Those clients placed downward pressures on firms’ fees, demanding less for more. Revenues dropped and firms contracted. Finding suitable firms with which to partner across borders became expensive and difficult.
This coincided with a tech awakening in the legal industry. The aim, of course, was to drive efficiencies and offer a differentiated service to clients. Throughout the 2010s, law firms hired a growing band of technology providers to develop applications or products. Technology facilitated the more efficient management of documents, particularly in a virtual environment across locations and borders, and became a necessary part of the toolkit required to advise clients. Technology sped up processes and facilitated anytime-anywhere interaction.
With this explosion of products and providers came challenges. Clients who were used to working with a variety of firms, as well as having their own in-house systems, had to accommodate different ways of sharing data. Lawyers in private practice had to do the same in reverse. In short, legal interactions between parties became increasingly complex to manage.
Meanwhile, the ways in which consumers engaged with products and services began to change. Platform businesses such as Google, Facebook, ebay, Amazon, Apple, Uber, Airbnb, Tencent and YouTube provided a way for consumers to connect, reducing costs and facilitating exchanges via technology. More than a piece of bolt-on software, platforms are a business model in themselves, a way of interacting and doing business between networks of users.
It is the platform business model that has been the inspiration for collaboration in the legal world. The notion that competing firms could work alongside each other and communicate and cooperate seamlessly would have been alien to most in the legal industry even a year ago. Most recently, lupl (a platform in which my firm has invested) was designed to enhance the way that firms and in-house legal teams interact, bringing systems and information together into one secure space. The response has been phenomenal, with 100s of law firms and legal departments signing up to participate and more than one hundred technology providers eager to integrate their tools. It is a community of people from legal departments and law firms around the world who want to co-develop the platform and believe there is a better, more efficient way to work together on legal matters.
What does this mean for BigLaw and all law firms? While coronavirus may have paused the continued expansion plans of the mega firms, another ‘c’ word – collaboration – could be the nail in the coffin of merger mania. An open-industry platform that any law firm or legal team is able to use could effectively eradicate competition between firms. It is a strategic model for private practice which allows established firms and their clients to collaborate without the complexity and expense of a physical and geographical merger.
Of course, the global pandemic has placed even more emphasis on the need for effective working processes. In many ways, our profession has been liberated by the temporary removal of physical barriers. Certainly, in my firm, there are meetings between lawyers in different jurisdictions which used to happen monthly in one location (with all the expense and time that necessitated) and which now happen weekly via digital means.
While the temporary loss of physical connection is a blow, there are many compensations. Interactions are more spontaneous and dynamic, and solutions are quicker to arrive as a result. With impressive speed, we have all had to embrace agile and remote working and reimagine how legal services can be delivered. There is also a social imperative to collaboration. Working together, we may play a more impactful role in solving social challenges which benefit from legal or regulatory intervention.
Over the long term, technology does not need to replace regular in-person interaction. Lupl is being designed carefully to take this into account. We know that traditional law is hierarchical. Some will be reluctant – even resistant – to break down barriers and relinquish practices that have been upheld for decades. Collaboration is in its infancy. But if you have been reading this publication and other sources of information about the legal industry in the last few months, you will have seen how the profession is opening up to modernisation. The evolution of the BigLaw business model, enabled by technology, will drive this change for the good of the whole industry.
The shift we saw in the legal industry after the Global Financial Crisis has been overtaken in scale by the changes we will continue to see as we head into 2021. All corners of the legal world, firms big and small, will need to put collaboration and technology at the heart of their businesses in order to thrive over the long term.