What’s next for innovation in the legal sector

The second Corporate Legal Innovators conference this year demonstrated just how far the legal profession has come and how important it remains to talk about innovation in law. 

The way we were:  We just have to look at the changes over the last decade. Ten years ago, when I was an in-house lawyer, if I needed extra assistance or support I had three options; recruiting additional permanent support, instructing private practice or hiring a locum. Those were the options whether I required assistance for due diligence, a contract review or for assistance on a global transaction.

Unbundling legal services: Over the last years the market has fundamentally changed. We have seen a breakdown of the legal supply chain; the “unbundling of legal services”.  A large part of the unbundling was to ensure that legal services were provided by the most cost-effective providers, which of course drives down the cost of legal spend, but also makes the legal function more effective and efficient.

The unbundling has provided great options for in-house teams, so we now have an increase from essentially three options to eight; LPOs, recruitment companies, legal document companies, legal technology companies, e-discovery companies, alternative providers like Halebury who offer placements and a strategic resourcing model, secondary brands such as A&O’s Peerpoint or Eversheds Agile and of course traditional law firms. The market has been blown wide open and more importantly, within each option there are a number of credible choices.

What is interesting is that the questions are no longer “I have a piece of work, do I have the capacity to keep it in-house or send it to my traditional law firm, how much will it cost and where do I get the money to pay for it?”. That was my choice and my decision making process when I was in-house.  We have a much more sophisticated thought process and in-house teams now analyse the piece of work and allocate work according to where it is on the value pyramid.

Now legal teams look at a number of factors when they are dealing with a piece of work. We have broken down the legal service delivery model to make it more cost effective, more efficient and more transparent.  We have a clear idea of who should do what and for how much.  So what's next?

A) Innovating through Legal Project Management ("LPM"):  Having made dramatic changes in the market nearly 10 years ago, a lot of new providers have been trying to obtain a share of the market, make our propositions distinct and find our space and feet in a market that had been closed for many years.  We have also been trying to create a new market space.  We should not stop the innovation in each of these areas.  However, there are more areas and one that is growing rapidly for us is LPM.

We hear a great deal about LPM within law firms and yes, they absolutely need project managers to ensure they are operating complex transactions more effectively and cost effectively.  However, in-house teams also need LPM and we believe this is a different proposition which covers two areas.

Firstly, the unbundling of legal services was the start of the process to create a more cost effective and efficient service.  As in-house teams and businesses have grown and developed, we need to look at the overall supply of legal services from an in-house perspective; how do they all operate together?  In particular, we need to ensure that the following areas are constantly being reviewed and adjusted:

1. Integration - in-house teams need to be aligned with the business to ensure they have managed the integration and work flow process, especially due to the unbundling of the legal services.
2. Legal services panel - legal services provided by external service providers must be properly managed, not just in terms of costs, but also in terms of risk management, general resourcing and accountability.
3. Team management - in-house teams need to be properly structured and motivated to ensure they are providing real value to the business.
4. Risk management – the level of risk must be correctly recorded and monitored both on a national and global level.
5. Future proofing – in-house teams need to make sure they are ready for changes within the business and any changes in the world e.g. Brexit. 

With any LPM process, it is essential that the strategy is well thought out, but also that the implementation of any strategy is properly managed.  Any plan should contain clear advice and recommendations on how it is implemented.  Those who devise the strategy should not only have a track record in implementing it, they should also be part of the implementation team and be accountable for it.

Secondly, LPM for in-house teams is also about training lawyers to be project managers.  As a profession we have been slow to train lawyers in this area. We have historically expected lawyers to pick up skills; you learn by doing it, by shadowing senior lawyers.  Actually, management and the management of transactions and projects within an organisation is a different skill and lawyers will benefit from formal training and methodologies. Some lawyers are looking to take courses such as Prince2 or Six Sigma, which is a great start.  At Halebury, we are in the process of developing a bespoke programme to train in-house lawyers to project manage transactions and projects.

B) Innovating through collaboration: “Collaboration” is another term which we in the legal industry are becoming used to hearing. Over the last 10 years the size of in-house teams has dramatically increased and continues to grow.  We as an industry, have to work together smarter to decrease costs, increase efficiencies and to provide a better end solution to our clients.  We need stronger collaboration.  The following three points highlight how we might achieve this:

1. LPM – making sure the in-house legal team and business team has the right service from the right provider.
2. Internal integration and communication - how are you communicating and collaborating internally?  In-house teams are no longer internal law firms but legal departments who are part of the commercial function. Ensuring that commercial and legal operate more effectively, communicate and integrate, is key.
3. Collaboration throughout the supply chain - GCs should be demanding more collaboration from external providers.  Traditional law firms need to reduce their costs but also become more agile and explore how their traditional and NewLaw firms could work together going forward. GCs should demand more collaboration throughout the entire legal supply chain. This will make a fundamental difference to the overall support from external legal providers.  

Learn to from other market leaders: Innovation is never easy and in some cases it is expensive and risky, although it does not have to be. However, if you look at leading companies in the world, they have all spent a great deal on innovation and they have taken risks. Think about Amazon who have spent billions on their infrastructure, on innovation as well as getting their house in order so that they are operating at the most efficient level.

Taking the time to focus on LPM is a fundamental part of ensuring you are ahead of the game in terms of operational structure and infrastructure and with greater collaboration legal services is into the next stage of its innovation. It is essential to remember the time and money you spend continuing to innovate and continuing to develop your infrastructure the greater your success will be.