What is going ON in the legal service world? Law firms with names like Bell, Dewar and Hall, John & Kernick and Findlay and Tait used to be all over the place. Now they don’t even exist. Instead we hear names like Caveat Legal, Cognia Law and even Whipping The Cat. Those in the know talk about LPO, ABS, non-traditional lawyers and NewLaw. Most recently the buzz is all about AI.
So what has changed – and what changes are there likely to be in the legal service industry in 2018 and beyond?
Let’s start at the top with the big players, the legal giants of the world and of South Africa. In the last few years Deneys Reitz merged with global firm Norton Rose (which merged again to create Norton Rose Fulbright), Webber Wentzel formed an alliance with powerhouse Linklaters, Baker McKenzie picked up the team from Dewey Leboeuf and launched in Johannesburg, Routlege-Modise first merged with Eversheds and more recently with Hogan Lovells. Eversheds then tied up with Mahons Attorneys. ENS and Bowmans elected to stay “independent” and embarked on an acquisition trail of their own elsewhere on the continent. Whichever way you look at it, the picture is clear – the “global heavies” have come out to play in Africa. The large local firms have beefed. They are all fighting for a chunk of the sizeable African legal service market, and seemingly, a dominant spot in the Sandton skyline. (Watch out for the “Big Four” accounting firms slow but steady creep into the commercial legal service market.)
“Law firms operate as a hierarchical partnership pyramid.”
The recent trend in the legal service industry is NewLaw. NewLaw is a term coined by Dr George Beaton, an ex-South African associate professor at the University of Melbourne who has written at length about disruption of the legal service industry. Basically, his argument is that law firms operate as a hierarchical partnership pyramid where lawyers churn the hours and fees in the hope of making partner and one day sharing in the partnership profits. It is a model that has not changed much in a century and arguably pits the interest of the firm against that of the client.
The global economic downturn worked against these old-style law firms, placing pressure on their fees. It also gave impetus to the growing number of alternatives to the traditional law firms. These firms are different to traditional law firms in almost every respect other than the use of legally qualified and skilled professionals. They focus on process and efficiency (not hours billed), have flexible working arrangements, deploy disruptive technology and charge clients fixed fees. There is an ever-increasing number of these service providers in the UK, USA, Canada, Australia and South Africa.
“The days of re-inventing the wheel for each contract are soon to be over.”
It now seems that NewLaw was just the entree to legal service disruption. The days of re-inventing the wheel for each contract drafted or each contract reviewed (and being able to charge for it!) are soon to be over. Computers get through this stuff with improved reliability, greater speed and at a fraction of the cost of a team of lawyers. In the Netherlands, it is possible for uncontested divorces to proceed between the parties and through the courts using an entirely on-line process. All the talk is about “AI”. But AIgoes beyond mere drafting, review and process. Companies like ROSS Intelligence use IBM’s Watson platform for legal research and chatbots can answer legal questions. Does this signal the end of lawyers?
“It is likely that some traditional law firm roles will fall away.”
The introduction of AI is likely to fundamentally change the legal service market rather than the legal service profession. It is likely that some traditional law firm roles will fall away. It is likely that several functions traditionally performed by lawyers will be performed by robots or other service providers. History suggests that while disruption, automation and technology may take jobs away, new jobs and functions are created.
“The successful lawyers will be those are able to use AI to augment their legal service.”
The successful lawyers and firms of the future will probably be those that are best able to adapt and to use AI to augment their legal service. So, in the next few years, keep your eye out for tech savvy companies with catchy names and innovative business models that are looking to mop up a large portion of the legal service market by appealing to all but those who need highly specialised skills and are willing to pay high hourly rates to secure them. But don’t expect to see these companies dominating the Sandton skyline – they are not likely to have big glamourous offices.