Page 167 - MASTER COPY LEADERS BOOK 9editedJKK (24)_Neat
P. 167
Leaders in Legal Business
FUTURE REFORMS IN LEGAL BUSINESS STRUCTURES
Speaking of the practice of law, in the United States, legal practice is highly defended and protected
from “non-lawyer” interlopers by the ABA and state-bar associations. Non-lawyers cannot share profits
with lawyers and law firms cannot sell equity stakes to business professionals. A non-lawyer engaging in
or profiting from legal practice will be punished, and hours of scholarly debate focus on when lawyers are
or are not providing “legal advice.” Originally intended to protect the objectivity of counsel from conflict,
in the modern legal practice, this prohibition may have become more harmful to the consumer of legal
services than good.
In the U.K. and some other jurisdictions, things are changing fast. By defining and dividing out
specific areas of practice, the new U.K. laws encourage more competition from “non-lawyers.” Critically,
the U.K. now allows for a new structure of law firm called alternative business structures (“ABS”).
Critically, ABSs allow non-lawyers to sit in professional, management, and even ownership roles. In the
past few years several large consulting and professional services companies have obtained ABS status —
including KPMG, BT, and PriceWaterhouseCoopers.
In our view, this simply makes too much sense to ignore. Shouldn’t estate planning, for example,
involve experts who provide tax and accounting insight alongside legal advice? Shouldn’t high-volume
discovery matters also include e-discovery technology and IT consulting? Why don’t technology
consultants include IP attorneys and their wisdom in their offering? Wouldn’t clients benefit from HR
consulting paired with labor and employment legal practices? ABS entities will begin to create these
innovative, integrated legal/business offerings and compete globally for the business of multinational
companies. We struggle to see how they do not end up claiming market share in the States and “arguably
open the world to legal services providers.”12
The American Bar Association (“ABA”) has investigated this in the past, but even small steps in
this direction were halted. Given the pressures, however, and the enormous potential for innovation and
profit, incremental steps forward are anticipated by many. In the meantime, LMS providers will play a big
role in bridging this gap and allowing U.S. Biglaw to compete. We foresee future partnerships between
Biglaw and LMS providers to be a necessary interim step until our laws are liberalized.
LEGAL MANAGED SERVICES: BENEFITS FOR LAW FIRMS
If LMS companies are eating into Biglaw’s market share, it would stand to reason that they are
natural-born competitors. After all, it was not long ago when outside counsel collected virtually all fees
related to representation — from legal research, to long-distance telephone calls, to document review, to
closing arguments at trial — as revenue to the law firm (even with some of those costs as pass-through).
Today, with technology startups, and LMS companies on the scene, law firms are seeing revenue from
traditional legal support tasks departing coming off their books. And the Biglaw firms are perceiving this
“threat” from LMS providers: according to a recent survey, 68 percent of respondents from large firms
believe that non-law firm providers of legal services are either presently taking their business or pose a
threat to do so.13
We respectfully disagree. If leveraged correctly and incorporated as part of a larger strategic
approach, the deployment and integration with LMS companies can result in new business lines, market
advantages, and increased job satisfaction resulting from an increase of the actual practice of law.
12 Laura Snyder, Does the UK know something we don’t alternative business structures?, ABA JOURNAL (January 1, 2015, 5:51 AM) (“ABS
structures can arguably open the world to legal services providers”).
13 Altman Weil, 2015 Law Firms In Transition (2015), http://www.altmanweil.com/dir_docs/resource/1c789ef2-5cff-463a-863a-
2248d23882a7_document.pdf.
160
FUTURE REFORMS IN LEGAL BUSINESS STRUCTURES
Speaking of the practice of law, in the United States, legal practice is highly defended and protected
from “non-lawyer” interlopers by the ABA and state-bar associations. Non-lawyers cannot share profits
with lawyers and law firms cannot sell equity stakes to business professionals. A non-lawyer engaging in
or profiting from legal practice will be punished, and hours of scholarly debate focus on when lawyers are
or are not providing “legal advice.” Originally intended to protect the objectivity of counsel from conflict,
in the modern legal practice, this prohibition may have become more harmful to the consumer of legal
services than good.
In the U.K. and some other jurisdictions, things are changing fast. By defining and dividing out
specific areas of practice, the new U.K. laws encourage more competition from “non-lawyers.” Critically,
the U.K. now allows for a new structure of law firm called alternative business structures (“ABS”).
Critically, ABSs allow non-lawyers to sit in professional, management, and even ownership roles. In the
past few years several large consulting and professional services companies have obtained ABS status —
including KPMG, BT, and PriceWaterhouseCoopers.
In our view, this simply makes too much sense to ignore. Shouldn’t estate planning, for example,
involve experts who provide tax and accounting insight alongside legal advice? Shouldn’t high-volume
discovery matters also include e-discovery technology and IT consulting? Why don’t technology
consultants include IP attorneys and their wisdom in their offering? Wouldn’t clients benefit from HR
consulting paired with labor and employment legal practices? ABS entities will begin to create these
innovative, integrated legal/business offerings and compete globally for the business of multinational
companies. We struggle to see how they do not end up claiming market share in the States and “arguably
open the world to legal services providers.”12
The American Bar Association (“ABA”) has investigated this in the past, but even small steps in
this direction were halted. Given the pressures, however, and the enormous potential for innovation and
profit, incremental steps forward are anticipated by many. In the meantime, LMS providers will play a big
role in bridging this gap and allowing U.S. Biglaw to compete. We foresee future partnerships between
Biglaw and LMS providers to be a necessary interim step until our laws are liberalized.
LEGAL MANAGED SERVICES: BENEFITS FOR LAW FIRMS
If LMS companies are eating into Biglaw’s market share, it would stand to reason that they are
natural-born competitors. After all, it was not long ago when outside counsel collected virtually all fees
related to representation — from legal research, to long-distance telephone calls, to document review, to
closing arguments at trial — as revenue to the law firm (even with some of those costs as pass-through).
Today, with technology startups, and LMS companies on the scene, law firms are seeing revenue from
traditional legal support tasks departing coming off their books. And the Biglaw firms are perceiving this
“threat” from LMS providers: according to a recent survey, 68 percent of respondents from large firms
believe that non-law firm providers of legal services are either presently taking their business or pose a
threat to do so.13
We respectfully disagree. If leveraged correctly and incorporated as part of a larger strategic
approach, the deployment and integration with LMS companies can result in new business lines, market
advantages, and increased job satisfaction resulting from an increase of the actual practice of law.
12 Laura Snyder, Does the UK know something we don’t alternative business structures?, ABA JOURNAL (January 1, 2015, 5:51 AM) (“ABS
structures can arguably open the world to legal services providers”).
13 Altman Weil, 2015 Law Firms In Transition (2015), http://www.altmanweil.com/dir_docs/resource/1c789ef2-5cff-463a-863a-
2248d23882a7_document.pdf.
160
