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The future of law - "Winter is Coming"

Ok so I apologise for the catchy heading and like Game of Thrones winter may take more than seven seasons finally to arrive for the legal profession. The point of this article is the opposite, yes change is coming but the death of the legal services industry is not upon us.

What follows winter is spring and the career of the future lawyer remains bright.

I want young lawyers and students considering a career in law to understand that change is on the horizon but they can still have a great career and in many cases a far more personally rewarding career as a human with more choices today than there have ever been. A career in law is no longer a linear procession though a law firm but that is progress. I started as a barrister over 20 years ago and imagined myself like Lord Denning working into my 90s. I stayed 2 years and as a successful entrepreneur have used my legal knowledge in building businesses on three continents across a range of industries. Now just imagine with advances in technology and communication what you can do today.

Too much has been written about the imminent demise of lawyers and it is neither accurate nor helpful especially for all of those high school and university students thinking about or studying law. While dropping our childminder back home one night last week she told me that she wants to study law and knows exactly what grades she needs to get and she is very driven to do so. She is soon to be 16 and I am sure will make a fine lawyer. Her career may look different to mine and to most practitioners today but she can still have a career and a good one.

Last week I read an article saying that if you are studying law now then you should quit your degree and go and find something else to do on the basis - not factual -that IBM's Watson and various other bits of AI will replace or make redundant 90% of lawyers. Yes AI and machine learning is advancing rapidly but it is there to make the legal process cheaper and more efficient, the best lawyers will keep their jobs and be even better, learning new skills and becoming more adept at emotional intelligence. The big question for me though is where the lawyer of tomorrow will work, and if their choice is a law firm what that may look like, how do they manage their career, part lawyer, part business adviser and part technologist.

The post I read was not written by Richard Susskind nor Mark Cohen nor someone who has a deep knowledge of the legal industry, but a designer who had copied a previous post on facebook written by an attendee at the Singularity University annual seminar in 2016 and the posts went viral.

Now you don't need to be well known to write an article - far from it and it made some interesting points but it was really scaremongering without any real basis on practical reality, just the doomsday scenario posed by rapid advances in technology across many industries.

To all the young lawyers out there today I would hate that reading an article such as that would put you off your dream. Maybe it will give you pause for thought and there are hundreds of articles saying that law is ripe for disruption and that in five to ten years the legal marketplace will be very different. Yes I agree it will but it will not be that different, the world will still need lawyers just what they do and how consumers engage with them will be different.

So there is no point in re-hashing what has been written many times before but here are a few facts.

  • the UK legal services market employs around 314,000 and this increases every year, we have around 135,000 lawyers with practising certificates generating over £30bn in fees. That is just the UK.

  • The global legal services market was worth over $700bn with around 45% coming from the US.

So lets be clear this industry is not just going to disappear overnight. Think how many service businesses support legal services, think how many business services staff support law firms, the ratio can be as high as 1.3:1. What is happening is how people consume legal services at the corporate level through to small business and the 'person on the street'.

You could look at the diminishing trainee intake at the magic circle firms or you can look at increased revenue and PEP. Whether the latter is sustainable is another matter as traditional law firms only survive by growth with their pyramid structure, put simply if partners start to earn less they will walk out of the door, poor management leads to dissolution aka KWM (King & Wood Mallesons). Now you could accuse me of generalisation and as I mentioned I am not writing a book here.

  • the number of trainees at magic circle firms in London is getting smaller - Clifford Chance reduced their numbers from 140 in 2010 to 80 now. The rest range from 80-110. To counter this the US firms in London are now offering training contracts with White & Case offering 50 which is more than Ashurst and BLP. Latham & Watkins offers 24.

Sure there is a war on at the moment fighting the billable hour over fixed fees and what to do with senior lawyers (non-partners) who are traditionally the most profitable lawyers in the firm when there is no room for them at the top table. Law firms are struggling to deal with the ebb and flow of matters and how to resource those departments at times of peak activity and during quieter times, fortunately interim and contractor services are becoming more prolific. The issue with senior lawyers is nothing new but they have more choices now outside of their firms to continue excelling at the practise of law. The biggest battle that law firms have on their hands is how to remain relevant to their clients - corporate legal departments. When their clients are demanding services be delivered and provided in a way that mirrors the commerciality of their wider business.

We could look at the amount of start ups spreading all over the world both in law tech and in the legal marketplace. It seems that a new one launches every day. Allen & Overy has launched 'Fuse' to work with start ups relevant to their practice and those of the clients, you could call it law tech or reg tech. A Thomson Reuters study on start ups in the UK shows over 60 law tech start ups founded within the last 7 years (to 2017) and with less than £5m in revenue. LawBot founded in Cambridge in 2016 launches their latest product elixirr today.

So do we really think that all of these clever founders are setting up in business for a diminishing industry - no, they just see opportunity within the legal services market. Many founders have technical backgrounds with no affinity to law at all, it is an industry ready for disruption.

Then we have the Alternative Service Providers such as Peerpoint by Allen & Overy, axiom, Obelisk, LOD, Vario, Agile and more providing flexible resourcing. You have to ask why they are building, not because the industry is dying but because it is changing. LPO's have been around for a while and this is just an extension. In addition to this we have legal marketplaces such as Lexoo, Lawpath, Upcounsel and Crowd & Co. These marketplaces offer the ability for lawyers to find work in the world at large, to pitch for work and provide services from wills and probate to magic circle trained contract lawyers for investment banks.

What will change at grass roots level is training & education, not just the SRA's new super exam but how we manage young lawyers and what we offer them in a law firm or corporation. Deutsche Bank announced recently that they will no longer pay for legal work carried out by trainees, this caused much consternation but we have to ask why should they. What value, knowledge and expertise are trainees providing to a client at hundreds of dollars an hour. If we changed the nature of what they do then there is perhaps more reason to pay for their expertise. As a former lawyer and consumer of legal services in my various businesses I want fixed project fees not fee quotes which can blow out to an additional 100% of the quote. I could never understand why I should pay for errors or marking up where I have done the editing myself, that more often than not it is the senior associate doing the work and not the partner. I am happy to pay fairly for value. Common sense really.

Again at grass roots level I could be in Sydney looking for an employment agreement for my UK business and just go to Lexoo to get a quote and find a lawyer - that is powerful. Similarly there may be a sole practitioner in Portsmouth advising a client in Leeds on the drafting of their will. Hopefully it is not a race to the bottom but more about quality and customer service. The strong will shine and survive.

The question has been asked a few times already what happens to the training process when clients don't want to pay for trainees or when data room M&A processing and litigation discovery is managed by technology far more efficiently and cheaper. It is not going to wipe out vast swathes of lawyers overnight but it will be race to have the most talented and productive apprentices and to give them high calibre work at an earlier stage, providing technology to enable their work. If in house legal teams want a minimum of 4 years experience for their external counsel and often more then we have to train those lawyers and give them practical experience. It has been mooted that maybe law firms only charge their corporate clients at 6yrs pqe and above or even just for their partners. Again there are plenty of issues to face such as leverage with the US firms employing far fewer associates to partners than their international UK counterparts.

So again this is not the death knell of the industry just a process of evolution which will provide young lawyers with amazing opportunities to work with a variety of different legal enterprises. We already have Halebury, Riverview, Keystone Law and Legal Vision in Australia, traditional law firms, in house teams, LPO's, freelance and contract models and a range of law tech innovators.

The business of law is definitely changing and disruption is coming like an express train but services will get better and diversify and lawyers will still have a place. Personally, and this is just my opinion, I am a big fan of the contractor model and more of my law firm clients, both UK and US are talking about it and how it can help them with their resourcing. Of course that is just the beginning, it is the corporates and in house teams who are placing more demand on their law firms. In house teams are already building panels for contractor services. However, and this goes back to my point about scaremongering, the level of media noise is disproportionate to the size of the freelance/contract model. Bearing in mind that many contract lawyers are represented by more than one provider, I estimate that the market (of the new models not the LPOs) represents maybe 1% of the entire local legal market that is by people certainly not revenue. But it is growing and rapidly.

I do feel that all of the talk is about how technology will disrupt the industry and decimate it, how if Amazon can buy Wholefoods then why can't Google acquire Clifford Chance or Latham & Watkins.

One point which is always missed is that with all of the changes coming nobody has stopped to ask the most important question - what do people as humans actually want, who do they aspire to work for and what qualities are they looking for? The leading international firms still believe that there will always be talented lawyers walking through their doors simply due to the quality of their work and the training that they offer. Yes that is true to an extent but with so many options available now law firms had better start to prepare for the fact that unless their values and behaviour are aligned to those young students and graduates of tomorrow, they may well start to look further afield to legal services businesses who offer both a career and practical training in technology and commerce, where climbing the career ladder does involve partnership but a collaborative collegiate transparent environment structured like a corporation.

Technology may alter the face of the profession but what young people want and desire will have a far greater impact. The future lawyer will have many careers and many paths to them but their future can be even brighter than for those lawyers of today.

What follows winter is spring - a time of optimism and growth.

Ed Andrew is based in London and is a former barrister. He has been a legal headhunter for more 20 than years from Sydney, Delhi and London and has worked with law firms in over 30 locations around the globe. From his business the Human Consultancy he consults to law firms and legal services providers, non law businesses and mentors people from all backgrounds.


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