The service industry is full of entrepreneurs pioneering technology to provide smarter alternatives to a global population. Uber provides taxi services through an app; Medicast can send doctors to your home on demand; and Just-Eat delivers food to your door from your choice of local restaurants. The driving forces behind these innovations are the increasing sophistication of technology, and changing work and social habits. The legal service sector is now an on-demand service. If large law firms have been relatively slow to react, 2014 saw many firms looking closely at the traditional delivery of legal services and working out how they can keep ahead of the game.
Developments in technology have for some time enabled law firms to showcase new ways of handling legal tasks within the traditional law firm structure, such as automated drafting of documentation and the outsourcing of disclosure and due diligence work. These innovations can be a cost effective solution for clients for routine tasks within a traditional partner/associate run transaction. What is now emerging is a new landscape of decentralised and multi-disciplinary structures which are responding to both the “on-demand” pressure from clients and the growing availability of lawyers who themselves wish to break away from traditional full time office work models. These emerging structures are generating new and challenging liabilities and insurance issues.
The US has led the way in structures which combine flexible workforces with on-demand services. One of the best known is Axiom Law. It tells us that it is not a law firm at all but provides “lawyer solutions” to corporations including seconding specifically tailored teams of lawyers to clients. Paragon, based in California, provides lawyers to corporations on particular projects and to act as in-house counsel during busy periods. A number of Paragon’s lawyers are parents who wish to work flexibly. In the UK, Riverview Law has, since 2012, been providing legal advice and in-house placements on annual retainers and fixed fees. Riverview states that its Legal Advisory Outsourcing offering is focused on the routine legal work that large organisations undertake on a daily basis that can be “packaged into long-term contracts”.
Structures such as these are generating new professional indemnity issues. One key issue is whether the entity providing the lawyer, or the host client, is liable for the lawyer’s errors. Is a client’s supervising General Counsel able to look to the PI policy if the lawyer’s advice is negligent? The first port of call is the contractual terms between the legal offering and the client. However, care needs to be taken over the possibility of implied contracts, duties of care in tort, and the scope and extent of exclusions.
The multi-disciplinary practice ClearSpire was hailed as a revolution in the structure of legal services due to its combined law firm and management consultancy divisions. ClearSpire lawyers were provided with remote work spaces and an advanced intranet. It had high ambitions for a large corporate client base. In May 2014, the legal arm of ClearSpire closed its doors. The demise was blamed on a failure to attract a sufficient pool of experienced lawyers to resource large projects.
VLP Law is another experimental law firm with a decentralised working environment. Some lawyers rent office space and others work from home. Meetings take place at the client’s work place. Decentralised structures such as these boast of improvements for the lawyers’ quality of life, reduction of environmental impact, and lower overheads which mean lower fees for the client. There are a number of considerations from a professional indemnity and regulatory perspective. The training and supervision of lawyers through a remote based system presents challenges. Equally special arrangements for the maintenance and presentation of documents have to be established. There is an increased reliance on systems specialists to set up and maintain more sophisticated networks and to ensure computer security. And the errors and omissions of these systems technicians presents its own area of risk.
New types of global legal offerings are emerging too. Cherie Blair left Matrix Chambers to set up Omnia Strategy. It has offices in London and Washington, DC, and gained Alternative Business Structure (ABS) status in 2013. Omnia Strategy holds itself out as providing “four pillars” of advice to clients: international counsel, public & private international law, international dispute resolution, and strategic communications. VistaLaw is an entity which uses a global network of law firms to offer legal advice and support in foreign jurisdictions to corporations and other law firms with small or no offices overseas. These types of structures generate particular regulatory and liability considerations – do they comply with the applicable regulatory regime in each jurisdiction, is the entity compelled to maintain a physical office and communicate in a particular way with clients, and has it got the appropriate authorisation and licensing to practice?
Some City firms are already embracing the on-demand revolution: Lawyers on Demand is a freelance pool of lawyers operated by Berwin Leighton Paisner; Derivative Service LLP is an online legal risk solution from Allen & Overy; and Simmons & Simmons Adaptive is a flexible legal resourcing structure. Client demands are likely to quicken the pace of change in the delivery of services and structures of law firms and that is what should be keeping us awake at night for the time being at least.