Peter Kalis: There’s room enough for Big Law and LPOs

Why classical lawyering – and its clients – have everything to gain from the efficiency drive sparked by alternative providers

Peter Kalis
Peter Kalis

Moral conceit is the cancer of our profession.  In our discourse, certitude is displacing reason as the medium of choice. Carefully nuanced distinctions are often bludgeoned by those without the subtlety to draw them. We talk loosely about the legal industry – law firms, legal publications, legal consultants, legal educators and more – without acknowledging that the entire structure is leveraged off the classical legal profession. If the legal industry is modern art consisting of a series of concentric circles, the innermost circle is our profession, and it is a profession whose values, language and traditions matter and endure.

It is a kind twist of fate therefore that sees the enemies of classical lawyering and of law firms take moral conceit to a higher plane and make us look good by comparison.  They see little value in the traditional profession and seek to depersonalise the highly personal lawyer-client relationship by inventing a mythical monolith called Big Law and proposing that certain “disruptive technologies” will obviate the need for much of traditional lawyering. They are not necessarily a cynical lot. Business is not cynical, and theirs is to sell books.  Ours, however, is to serve clients.

In George Beaton’s blog, I once referred to these critics collectively as ABLACs. In search of my own mythical monolith, I maintained that ABLACs are members of a shadowy organisation called Against Big Law at Any Cost. ABLACs, incidentally, should not to be confused with All Blacks, New Zealand’s national rugby union team, which performs the haka before each match. Instead of issuing a Maori challenge from the middle of the playing field, ABLACs tend to stay on the sidelines, keep their uniforms clean and describe how they would play the game if only they were really players. The single thing that ABLACs and All Blacks have in common is that they both stomp the ground, albeit for different reasons.

I was thinking of ABLACs recently while sitting through a presentation on ‘seepage’. Seepage is the syndrome supposedly afflicting Big Law whereby our traditional legal services are leaking out of the black box in which they are comfortably housed and into the waiting vessels of legal process outsourcers and other alternative providers, an ineluctable process leaving retrograde and clueless managing partners bowed and bloodied on the battlefield. As Seinfeld’s friend, George Costanza, once said about shrinkage, however, and I couldn’t agree more about seepage: “If she thinks that’s me, she’s under a complete misapprehension.”

Based on various estimates, these alternative providers have a fraction of one per cent of the approximately $500bn global legal marketplace. I’ll give the ABLACs this: ‘seep’ is the right verb because ‘leaking slowly through small holes’ seems perfectly to capture this ‘strategic’ threat to Big Law.

The point here is not to challenge whether markets drive all participants to more efficient delivery mechanisms. Of course they do. This is the nature of competition, whether from LPOs, consultants, accountancy firms, inhouse law departments or even the hundreds of law firms we compete against around the world. The point rather is to challenge the ABLACs’ implicit assumption of a static black box of legal services.

ABLACs fail chronically to stand in the shoes of Big Law’s clients to see what drives their legal requirements at the top end – not at the continuously commoditised bottom end. While commoditised services happily seep out of the bottom of the black box to more efficient destinations, vexing new legal challenges flow into the top of that box as if from a fire hose. There are three main drivers at the top end: globalisation, regulation and innovation.

Globalization is the movement of people, products, services, capital, ideas and commodities across national borders. As national borders become less and less important to the flow of commerce, sovereign legal systems paradoxically become more and more important to clients – and so do highly specialised lawyers who understand those sovereign systems.

Regulation comprises the ratchet-like and often inconsistent interventions of governments around the world into private markets. These interventions arise from the explosion in knowledge that regulators and legislators can draw upon when discharging their public duties. Compare our knowledge now to that of a decade ago concerning, as but two examples, the systemic weaknesses of the global financial system or climate change. Armed with that knowledge, legislators and regulators act – not always wisely, to be sure, but wisely or not they create a demand for experienced lawyers at the governmental interface.

By innovation, I mean the creation and protection of intellectual property. An astonishing percentage of the asset value of most major enterprises is housed in intellectual property, and not just in the technology sector. Even in traditional smokestack industries, razor-thin margins are maintained through constant innovation.  Intellectual property law is emblematically a core legal discipline of the 21st Century.

Big Law need not fear LPOs or other alternative providers because they are part of an efficiency-enhancing eco-system that refreshes the legal services industry and brings value to clients – as a complement and not a threat to classical lawyering.