7 trends forcing the legal industry to change (Overview)

trends in legal industry

Our social habits and ways have changed dramatically in the past few decades both from a cultural and technological point of view.

Such changes have deeply affected markets and industries, including the legal industry.

In this article, we will look how the legal industry has changed, and is forced to continue changing, to adapt to our new social realities.

We will look at the following points:

  1. Electronic discovery (e-Discovery)
  2. Social networking
  3. Legal process outsourcing
  4. Globalization of legal markets
  5. Virtual law firms
  6. Alternative legal services
  7. Alternative pricing models
  8. Conclusion 

Let’s dive right in.

1- Electronic discovery (e-Discovery)

Electronic discovery practices have significantly evolved over the years due to the ever changing legal landscape and technological advancements.

With the abundance of data, communications, communication channels, platforms and new devices used to exchange information, an e-Discovery software is now invaluable for lawyers and legal departments in sorting through all of it. 

Legal technology has become an essential tool supporting legal departments and law firms in running their operations. In fact, global investments in legal technology in 2019 exceeded one billion dollars

Legal departments and companies are seeking to take advantage of the e-Discovery software procedures to reduce their external legal spend, risk and difficulty in handling e-Discovery matters.

E-Discovery is here to stay.

Legal changes along with the technological innovations will continue to change how the legal industry operates.

2- Social networking

Social media is now deeply ingrained in our daily lives and has contributed to reshape the legal industry in important ways.

Lawyers, legal professionals, in-house attorneys and members of the legal profession use social media tools to engage with clients, prospects, perform tasks and make career moves.

Litigation lawyers use social media to attack and discredit witnesses in court and extract evidence leveraged in the context of legal proceedings.

Company attorneys are gathering data and information on their clients and their employees. For instance an insurance company can follow a client on social media and if a client can be insured or perhaps avoid indemnifying. Employers follow their employees to see if they are really on sick leave. The list goes on.

Social media presents new challenges impacting the legal industry. Confidential information can be disclosed causing severe and immediate damages, trademarks can be illegally used, slanderous messages could be published or copyrighted work can be used without the permission of it’s author. 

3- Legal process outsourcing

A survey done by CorbinPartners and Taran Virtual Associates shows that 40% of lawyers surveyed use legal process outsourcing for work in their law firms and legal departments.

Legal process outsourcing is the process of obtaining legal support services from an outside law firm or legal support service company.

By sending work out to legal process outsourcing vendors, as a law firm or a legal department, you have the ability to work on matters in ways not possible only a few decades ago.

Legal process outsourcing offers many advantages to lawyers.

Legal process outsourcing is now a significant component of the legal industry. Lawyers and legal departments find efficiencies in sending work out to legal process outsourcing companies to get quality results at a lower cost. 

You can send legal work out to a legal process outsourcing company and reap important cost savings. 

Law firms and companies collaborate with legal process outsourcing firms specializing in a very specific legal task. This way, they tap into an expertise and efficiencies they would not have been able to otherwise.

By having access to external expertise at a reduced cost, you will have greater flexibility in deciding what type of work to keep in-house and what to send externally. 

Legal process outsourcing allows firms and legal operations to expedite and quickly process legal tasks at speeds not possible before. 

According to MarketWatch, in 2018 the global legal process outsourcing market was $4.5 billion dollars and is expected to go to $35.9 billion dollars by the end of 2025.

Statistics and market trends show that the legal industry is relying more and more on legal process outsourcing firms. This will continue for so long as efficiencies could be found.

4- Globalization of legal markets

To remain competitive, law firms are actively looking to expand across borders and form international alliances with foreign firms.

Technology is allowing collaboration between lawyers in different territories and regions and making long-distance collaborative work easy and seamless.

With worldwide access to fast and reliable internet connections, collaboration software tools and devices, lawyers everywhere in the world can expand their global footprint with minimal investment. 

With a global legal marketplace, the legal industry is trending more and more towards the democratisation of legal services as legal clients can directly reach out to law firms in any territory for legal services as opposed to dealing with an international law firm having a local office.

Globalization is continuing strong.

Business and industries will continue to evolve thus forcing lawyers to change and serve them better.

5- Virtual law firms

A virtual law firm is a legal operation leveraging technology for its main operations and functions. Lawyers work collaboratively from remote locations and serve their clients through electronic means.

This new breed of law firms operate through a stable set of attorneys grouped under one entity or partnership leveraging computers, telecommunications technology, project management software and a cloud-based legal practice management software and operate “virtually”. 

This type of setup results in lower overhead costs compared to a traditional brick and mortar law office making it interesting for the lawyers involved and for their clients who benefit in most cases from the passed on cost savings.

Considering the virtual law office’s business model is found upon the use of technology, it makes it easier for them to scale their business, expand into new legal markets and territories without necessarily seeing a significant increase in their operating costs. They can also retain legal talent in any region or territory.

Having the freedom to manage their legal work, dealing with lower overhead costs, stressing less about operational costs, having the ability to compete with law firms in any territory and quickly penetrating legal market niches, lawyers operating under a virtual law firm setup seem to be hooked to this business model! 

6- Alternative legal services

It used to be that lawyers were the only show in town when in need of legal services. That is no longer the case. 

Alternative legal service providers are new kids on the block.

They are companies specializing in a high-demand legal service niche like:

  1. Document review
  2. Litigation support
  3. e-Discovery
  4. Legal investigation
  5. Legal research
  6. Intellectual property management

Alternative legal service providers become experts in a very specific legal process by implementing best practice methodologies, hiring skilled personnel and leveraging technologies. The core business model is that legal process making them superbly efficient and good at that single process.

Lawyers in law firms and legal departments cannot rival that as they must deal with many processes and operational inefficiencies.

Non-lawyers, consultants, legal process outsourcing companies, do-it-yourself websites, virtual assistants, virtual law firms, paralegals, you name it, they are all working hard to take a bit out of the legal market pie.

Legal clients are no longer bound to deal with a lawyer, they now have other options. They can shop around and get what they need for a fraction of what they would have otherwise paid a traditional lawyer in fees. 

Clients are empowered to address their own legal needs and now sit in the driver’s seat.

The legal trend has moved the legal industry from a seller’s market to a buyer’s market

7- Alternative pricing models

Gone with the days where lawyers would dictate their legal fees with an iron fist.

The legal industry is undergoing important changes contributing to a downward pressure on legal fees. Lawyers need to look at their fee arrangements and get creative, think outside of the box.

Alternative pricing models for legal services are emerging to combat competitive trends and the traditional hourly rate model.

With the democratization of the legal services, legal clients are able to purchase legal services for a set price making the ‘billable hour’ model offered by lawyers as unattractive. 

Businesses and individuals prefer having a predictable fee arrangement. They want to know how much they are required to pay for legal services so they can adequately budget and forecast their costs. That’s what businesses need and that’s what they are demanding from their lawyers.

To compete, lawyers need to offer different types of fee arrangements such as fee caps, fixed fee, fixed fee single engagement, full contingencies, holdbacks, success fee, portfolio fixed fee, retainers, risk collars, subscriptions, you name it.

The traditional billing per hour leaves clients anxious and stressed about how much a mandate or a legal task can cost due to the unpredictable nature of the billing model.

With an hourly billing model, the lawyer is transferring all risk to the client. Clients are now pushing back.

Clients expect that the lawyer puts some skin in the game by offering alternative pricing models to equitably allocate risk.

As we leap into the future, the hourly billing model will continue to lose ground in favour of alternative pricing models, and that is a trend that we’ll monitor in the years to come.

8- Conclusion 

For a conservative industry like the legal industry, we have come a long way.

Pressures from legal technology companies, alternative service providers, legal process outsourcing vendors, virtual law firms and others new players in the legal segment are forcing the legal industry to change.

Lawyers must adapt to their new competitive realities to ensure their survival and long-term growth. 

The legal client’s consumption habits have changed over the past few decades. They can turn to a lawyer for legal support or organizations managed and operated by non-lawyers entering into the legal space. The legal clients have less loyalty to an individual lawyer as they did in the past.

The pace at which the competitive landscape is changing is ever increasing and we will witness more changes impacting the legal industry going forward.

As lawyers, let’s remain in touch with the new social realities. Let’s innovate and find win-win solutions and offerings so that we can give the best possible service to our clients and grow with them.

We hope that this article was useful in outlining the trends affecting the legal industry.

Have you seen other trends that you would like to share? Are you seeing untapped opportunities that could drive the legal industry to continue changing? We’d love to hear from you. Leave us a comment.