The Legal Ecosystem: A Look at Tension Points for an Industry in Turmoil (Part 1)

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legal ecosystem

Editor’s Note: This is the first installment in a series of articles in which Lucy Endel Bassli will explore the key players in the legal industry ecosystem and the pressure they are exerting and enduring. She will focus on the commercial practice of law and players including regulatory and industry groups, law schools, the legal tech community, legal service providers, law firms, the Big 4 and corporate legal departments.

Bassli brings a depth of knowledge and a powerful perspective to this topic. Until recently, she was assistant general counsel at Microsoft, where she overhauled the global contracting operations by re-envisioning the mix of people, processes and technology. Earlier this year, she founded InnoLegal Services, a unique combination law firm and consultancy that advises on process optimization and on coaching lawyers in innovative practices. She also serves as Chief Legal Strategist for LawGeex, a start-up providing AI-based contract review automation.

Part 1

It should come as no surprise that many practicing lawyers are unaware of the seismic changes happening across the legal industry all around them. It’s no surprise because they are so focused on the beloved and simultaneously loathed billable hour, making it difficult for them to look up and see what is happening outside their building, or even their floor.

Many attorneys are not even aware of being a part of an ecosystem or an industry — indeed, one that presumes business operations, strategic relationships, creative business models, finances, and expertise in the production and delivery of particular goods or services, etc. Most attorneys would first associate themselves with the industry their clients belong to: automotive, telecom, retail, etc. But attorneys are actually at the intersection of two industries at any given time: their clients’ industry and the legal industry.

The legal ecosystem, or more importantly, the players in that ecosystem have definitely solidified the legal profession as its own industry. The key players are forming strategic relationships, utilizing expertise, defining new business models and other characteristics of an “industry.”

According to Merriam-Webster, an industry is defined in a number of ways that would certainly apply to the legal ecosystem of involved contributors: i) systematic labor especially for some useful purpose or for the creation of something of value; ii) a department or branch of a craft, art, business or manufacturer; and iii) a distinct group of productive or profit-making enterprises. No matter how defined, it is high time attorneys appreciate that they are part of an industry, in addition to a profession.

The legal industry seems to be in crisis mode lately. On one hand, the big firms are doing financially well, but their clients are reporting in numerous surveys that they are dissatisfied with the services. The sentiment in large in-house legal departments is that their law firms are not doing enough to be creative with their fees or adding value, yet the revenues at the big firms continue to rise.

The number of players providing legal services in alternative ways is rising, and it’s testing how far these companies can go without “practicing law.” Clients are buying these services in increasing volume and using those relationships to learn how services can be delivered in optimal ways.

Legal technology is advancing at greater speed and accessibility than ever before, and it will continue to accelerate, replacing low-level legal work with automation. Meanwhile, law schools struggle with declining enrollment and pressures from hiring firms to educate graduates on new skills while tenured professors resist changing long-held curriculum.

So, while the legal industry’s financials show no sign of a classic economic crisis, there is certainly an identity crisis. What is the practice law? Can robots practice law? How can alternative providers compete with law firms, but not be licensed in the US?

I look forward to addressing these and other questions in future installments in this series.

You can read the next installment in the series, addressing regulatory and industry organizations, here.