How Legal Services Are Becoming More Affordable

The Rising Demand for Affordable Legal Services

The demand for affordable legal services is growing. Liberalizing regulations and new technologies mean law firms no longer hold a monopoly over legal services: they now face competitors that can supply many of their services more efficiently and at a fraction of the cost.

At the core of these changes is a separation of ‘Legal Services’ and the ‘Practice of Law’. The former include routine aspects of legal processing that don’t require expert legal judgment, such as document review and due diligence. In the words of the legal futurist Richard Susskind, clients have realized that ‘we don’t really need expensive young people in expensive buildings in expensive cities doing this’.

The New Competition

In the UK, the Legal Services Act 2007 has made way for Alternative Business Structures (ABSs) as cheaper alternatives to law firms. They can accept investment from non-lawyers and engage in interdisciplinary practices – regulations that had until recently protected the industry from many market forces. There are now over 500 ABSs operating in the UK.

The Big Four accountancy firms are now in a strong position to compete with law firms for mid-level legal service work. In fact, they are now actively targeting these markets and competing effectively with the added leverage of their significant revenues and respected global brands.

Other competitors offer low-cost legal services on tech-driven platforms. LegalZoom is an online tool for creating legal documents such as wills and incorporation documents, and does it for a fraction of what lawyers charge. Axiom Law uses a mix of technology and process to supply a number of legal services such as negotiating and drafting routine contracts, in-sourcing its lawyers to corporate clients.

The In-House Revolution

One of the largest trends in the corporate legal market in recent years is increasingly large in-house teams. Companies have recognized this as a fundamental step towards reducing costs: doing more legal work in-house. There are now over 10,000 lawyers working in-house with FTSE 100 companies: HSBC employs as many as Clyde & Co, the UK’s twelfth-largest firm.

Some legal teams use new technologies to reign in costs. Inside Counsel named Archer Daniels Midland Co. as one of this year’s ten most innovative law departments – the team developed technology to standardize repetitive tasks like non-disclosure agreements. Clients input their needs themselves; the software can recognize if a standard contract will suffice. If so this contract will be produced automatically, saving the legal team hours on such routine work.

Corporate law departments are likely to put even more emphasis on technology in their future cost-saving strategies. Respondents to the 2015 Altman Weil Chief Legal Officer survey cited ‘greater use of technology tools’ as the third-most common means of increasing efficiency within their departments. They also ranked technology as the factor most likely to change the legal market in the near future.

The Future

Corporate clients are the winners in a legal services market that is getting more competitive, efficient and affordable. Legal spend management solutions like Brightflag help corporate legal departments analyze their external spending and identify how each piece of work should be resourced – allowing them to take full advantage of the new legal services landscape.

For law firms, future success will depend on how well they can embrace these changes and adjust accordingly. Routine work needs to be delivered in a cost effective way, pricing needs to be predictable and value-based. This will allow great law firms to focus on what truly differentiates them and cannot be replicated by technology or low-cost alternative structures – specialist advice and judgement.

Ian Nolan

CEO at Brightflag

Ian Nolan is Co-Founder and CEO of Brightflag. He has spent his entire career building software for the legal industry. Ian received his Master’s of Business Administration (MBA) Degree from the UCD Michael Smurfit Graduate Business School, and holds a Bachelor of Arts (BA) Degree from Dublin City University.

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