Last year we predicted the legal services trends that would dominate 2016. However, without our crystal ball or DeLorean, we couldn’t predict the political upheaval (think Brexit, the Trump administration and European elections) that the world would undergo.
A new white paper offers exclusive insight into the changing—and challenging—world of legal outsourcing. Discussing trends, opportunities and threats to the market, this white paper analyzes the Big Four and how they are set to disrupt the legal market with their financial power, imagination and progressive outlook.
Here are some of the most essential extracts from the white paper.
Many businesses are under constant pressure to reduce legal spend (and demonstrate commercial value) and are now seeking more tech-savvy, integrated service providers who can offer more return on investment than the traditional law firm.
As we discussed in our paper last year, the relationship between GCs and their panel law firms is changing. GCs need ‘smart-sourcing’ and not simply ‘outsourcing’ and therefore they are turning to alternative service providers.
What of the traditional law firms?
The biggest obstacle facing the profession is, in no uncertain terms, the fear of change. We have seen that they tend to ‘copy’ what is successfully applied by new entrants—no one wants to be a trendsetter and fail. We have witnessed new entrants delivering flexible staffing (Axiom) and the dowager copying (BLP with Lawyers on Demand); others delivering low-cost alternative dowager copies (Integreon and HSF with Captive), and tech start-ups entering the market mimicking these developments (Dentons has its ‘NextLaw Lab’).
Accountability vs opportunity
Technological advancements will bring unprecedented benefits, of that we can be sure. With these, however, will also come greater visibility and subsequently increased and enhanced scrutiny across the business. The legal department will not be exempt from this and should bear in mind that the demystifying of legal data, such as contracts, has begun and will surely accelerate in the coming years. This will inevitably lead to greater transparency and accountability for all involved. I suspect the next few years will see some high-profile casualties in regulated industries who have not taken heed of the way in which the market is moving.
The new disrupters
The new disrupters of the legal market will be the Big Four. They are not only embracing technology to be able to provide cost-effective legal services, but they are also driving a change in the pricing model. They provide packages that bundle together several services for a cut cost. Without dwelling on the P&L, they are changing their pricing structures to better service the client—they are willing to take a hit in one department to attain high-end work in another.
The elephant in the room: pricing
With tech entrants and new model providers, real pricing innovation just might happen. If the client demand is to discover x data fields from multiple sources, there are multiple ways of completing this task and multiple uses for the data. What if, when trawling this data, you can look to the value that might be created? Imagine if you are looking at 100,000 contracts and for a small incremental cost you can take a much closer look at obligation enforcement? Tech will allow data extraction to be non-linear and therefore more valuable.
With this in mind, we can start to see the opening of the door to pricing for value and the door for costing for effort coming to a close.
To read the white paper in full, click here.