by Patrick Dransfield*
I was recently asked to participate in a discussion workshop organised by ZICO Law on the subject of the law firm of the future, which prompted me to consider this topic in some depth. As we come to the end of 2017, it seems appropriate to put my spoken words into prose.
The law firm that will succeed in the future will no doubt be one that meets — or even exceeds — client expectations. So, the first question to ponder is: What are client expectations?
Clients vary as to their needs and challenges and the best way to find out is to ask them. A second option is to refer to the research compiled by the In-House Community, who have canvassed over 2,500 in-house counsel on your behalf.
The biggest prevailing challenge for in-house counsel in Asia is talent management. This may come as a surprise to external lawyers, many of whom believe that spend management outweighs all other issues, but guess what, it is not all about you. The need for talented lawyers (and others) will be encouragement for Axiom, and others, as they expand further into emerging markets, having already created a US$300 million-a-year business, largely in North America and Western Europe.
Naturally, the needs of general counsel depend on a number of factors, not least their industry, company type and location. Not a few in-house counsel we have met this year are ‘one-woman’ bands, achieving amazing coverage for their multinational employers from a very limited headcount (especially compared to company HQ). These general counsel will be looking to outsource to not only private practice law firms, but increasingly to new legal service providers.
However, two-thirds of our in-house departments tell us that they are doing all or most of the legal work in-house. What they are looking for from external counsel is ‘grey hair’ — or experience. Those with the ability and confidence to advise general counsel on the knottier issues of the direction of regulatory regimes, or post-M&A consolidation, for example, will always find willing customers. How this will play out into the future, nobody knows. The talent pool of associates that have to this point supplied in-house departments with trained attorneys will be a dwindling resource as clients demand partner attention only. Also, the millennial generation — at least in Shenzhen and Abu Dhabi — are passing by law firm employment entirely and joining in-house teams almost as soon as they pack up their books from college.
The future is already here — it is just not evenly distributed. There continues to be a shocking lack of knowledge among external lawyers and in-house counsel alike regarding even the availability of legal technology, let along the project management of it. That said, some private practice and in-house teams alike have embraced the concept of law as a team sport. Magic circle firms and top in-house teams, especially those involved in the oil-and-gas and infrastructure sectors, have employed non-lawyers in significant numbers and with increasing prominence. Engineers employed as legal project managers being one example welcomed by clients; technology and knowledge management experts are also coming into their own (and, less so, business development and marketing folk).
But there is something of an anomaly. As I seek the law firm of the future, I see the ghost of Christmas present is still very much in the room — top-tier firms such as Clifford Chance and Latham & Watkins are celebrating record-breaking years for both revenue generation and profit-for-partner, while the Georgetown Law Report sounds like a broken record, pronouncing doom and gloom on the legal industry as a whole.
On a more positive note, one developing trend witnessed in 2017 is that general counsel are becoming much more confident risk managers. The topic of risk management and philosophical discussions about what risk actually is began to be aired at least in my immediate hearing around four years ago. Now, general counsel, especially of new tech companies, are confident to talk less about ‘more for less’ and more about ‘less is more’. The drive to become a true business partner to the corporate has continued apace among the in-house community and general counsel are now questioning the value-add of full legal coverage, and applying a more nuanced approach to what legal work is actually necessary to the company as a whole.
As Dentons’ chief, Joseph Andrew, recently observed in our interview, the largest law firm has only 0.6 percent global market share, so perhaps Georgetown Law will be proved right and we are in for a massive consolidation of the global legal industry, with those law firms that continue with traditional services finding that the phone simply stops ringing for them. Indeed, across generations of lawyers, everyone wants to go in-house these days, at least in Hong Kong. Even in the check-out queue in Marks & Spencer, one cannot escape 50-something white male partners complaining about how clients can now read the law for themselves and are expecting 24/7 service from them.
Anecdotally, the China market seems to be proving especially challenging for foreign law firms — less so for domestic players who appear to be booming. New players on the block also bring a new dynamism to the legal market. Witness TianTong law firm, which not only specialises in domestic dispute resolution related to the Supreme People’s Court of China — an example of a boutique firm that simply did not exist 10 years ago — but also embraces social media and technology in a manner never dreamed of before. Well over 450,000 individuals subscribe to TianTong’s WeChat litigation updates each month.
Peter Connor’s question of whether the law firm of the future will be a software company seems apt as I reach for a conclusion. Apparently, no company in Silicon Valley wants to be called a chip company anymore. I do think that we have a long, long way to go before the concept of traditional legal advice gets dropped from the law firm offering. But looking at the legal industry in the context of other industries does have merit. The music industry has just emerged from a lost decade to profitability — with the same five companies still dominant. That consolidation was the product of both technology and overwhelming client demand. Are we likely to see that clear-sighted client demand in the legal industry? The evidence thus far seems to suggest the answer is ‘no’.
*Patrick Dransfield is Co-Director of In-House Community. Patrick has over 20 years of experience working in the legal industry: firstly as a Publisher and later Asia Managing Director of Euromoney Institutional Investor, and then as Marketing and Business Development Director for Asia for Shearman & Sterling and White & Case respectively. After spending 6 months advising a start-up online language learning site for children (Study-cat), Patrick joined Pacific Business Press as Publishing Director and Co-Director of the In-House Community™ in 2008 and continues in those roles. His publishing career began with Haymarket Publishing in 1987.
Patrick is a graduate of Leeds University (B.A. Joint Hons. in English and History of Art) and also holds a Master’s Degree in Far East Area Studies (specialising in Chinese History, Anthropology and Politics) from London University’s School of Oriental & African Studies (SOAS).
Contact Patrick at firstname.lastname@example.org