Disconnection in the legal services market? Reflections on the 2017 Legal Market Forum

A week ago we had a chance to participate in the Legal Market Forum organized by Thomson Reuters Chile and Alster Legal. In that instance we could appreciate an intuited but undeclared reality. I am referring to the apparent disconnection between legal service providers and legal business departments. Indeed, it seems that the realities of both worlds are parallel and not necessarily concordant. Moreover, it seems that we would have witnessed eloquent contradictions, where legal studies and legal departments did not agree on a common vision of the relationship they should have built.

While for some time now we have been expressing the need for legal studies and legal service providers to adopt working methodologies that approach them, we see that the market trend remains unchanged and a faithful testimony to this was the dynamic between representatives of both sectors. Some called for greater transparency and change in the forms of collection, not to transfer unnecessary costs such as strenuous offices, to incorporate working techniques of the project world and to begin to talk about diversity. Others, on the other hand, protected their model, asked to understand their cost structure, stated that their talents are the reason why their forms of collection are justified, restricted the discussion of diversity to gender equality and were sceptical about the use of technologies to improve their internal processes and the transparency of information to their clients.

There is no doubt that there is a way to go, especially by those of us who position ourselves as service providers in this industry. The discussions held at the forum do not, at all, differ from the issues addressed in developed countries, particularly with regard to the modification of fee-collection systems, the incorporation of Legal Project Management, the introduction of technologies as a tool for more efficient implementation of standardized work and the generation of a more transparent flow of information for the client and, of course, the diversity understood in its broadest extent.

They will ask me why these elements are so relevant if for centuries legal services have been provided without change, to the extent of situations and through professionals trained to deal with complex and uncertain situations with flexibility and dynamism. My response to this approach lies in the current structure of the legal services market, where there are functionalities that, given the available technologies and working methodologies of areas such as administration and engineering, allow for the identification of tasks that lack such special quality that I used to call them sporadic, unique and tailor-made. Today, digitization, access to information, the speed and ease with which tasks that were previously monopolized by lawyers can be carried out, creates inescapable pressure on market actors.

The legal departments of companies have taken a leading role, which is ratified through studies that have been published in the last time (Idealis Reports published in Financial Journal; CEE 2017 Corporate Handbook; among others). The reality of these organizational support units is that they must run "more with less," which means that in an increasingly complex regulatory environment, they require the necessary help of external service providers aligned with the interests of the company, that they adequately understand the border restrictions that the use of their services implies and that they build value proposals that make their relationships sustainable. In this regard, the legal departments today impose conditions, require that more and more people migrate from the hourly collection system and propose new ways of setting fees, need their providers to align themselves with their corporate policies of corporate social responsibility, diversity, non-competition and many others, and call for measures that can ensure effective efficiency.

In this way, how can a service provider take over these new requirements? Development of multidisciplinary areas to ensure that the work processes and protocols of lawyers are those required by the client, incorporating control metrics that escape the actual time worked; (ii) Modifying their incentive systems, inducing results and value aggregation rather than billing; (iii) Incorporating information technologies that enable them to manage knowledge and, in particular, to lead cultural change in their clients; (iv) Design policies of inclusion and diversity, as well as identify points of connection and collaboration with the social responsibility policies of the clients they serve. These and other measures will ensure the future of legal service providers and will enhance relations with the legal departments of tomorrow.

Andrés Jara | Partner Alster Legal
ajara @ 18.209.34.37