Practice Management

Profiting from New Market Demand: Alone or Collaboratively

By Ronda Muir

In an effort to profit from the demand for more cost-effective legal services, law firms are considering offering a broader range of services themselves and/or entering into collaborative endeavors with other organizations--law firms, legal providers or non-lawyers, in some cases even servicing other law firms.

For example, some firms are entering the market for unbundled, separately-priced litigation support services by adding specific expertise and staff as an adjunct to the firm's existing practice.  Other firms have done so through a wholly-owned vehicle. King & Spalding does document review and other litigation prep work not only for its own clients but for other firms' clients as well by a separate team that is also hired and housed separately (although still in Atlanta).  Baker & MacKenzie has a wholly-owned subsidiary entirely separate from the firm's practice that does litigation prep and management . Taylor Wessing has created an affiliated but separately-staffed corporate services business in its Cambridge location that offers clients, including other law firms, lower-cost options for standardized legal work, such as corporate due diligence. And Eversheds announced this past week the launch of its in-house consulting business specializing in legal department management.

Groups of firms are also working together to efficiently service specific practice areas, industries or clients. LegalOnRamp, built on that principle, is probably the largest town square meeting of lawyers available on-line.  Some firms are banding together independently to accomplish a comparable result.  For example, there is a Banking Legal Technology Group composed of five law firms that provide industry-related  on-line elearning, document templates and document assistance.  

This approach can be counter-intuitive--in a competitive marketplace it feels like fraternizing with the enemy. But that is what GCs will want--and will benefit from. The relinquishment of pride of exclusive ownership required by these kinds of arrangements is made in exchange for work from clients who want the considered viewpoints and resources of a diverse group. And, frankly, a better product.

Collaborations with outside outsourcers, litigation management firms, and paralegal resources also require a relinquishment of at least part of the profit margins a firm might have historically realized on that work, but with the anticipated result of a happier, more efficiently served client and usually without the costs required to house, feed and manage those troops.

How to move from the traditional business model to one that embraces some of these new approaches?  Christensen, in his seminal Harvard Business Review article, "Meeting the Challenge of Disruptive Change," suggests essentially running two businesses at once: one with the old business model (which is usually still viable while disruptive change is emerging in a marketplace) and one with the new business model.

As an example, one of the more innovative new firms is Axiom, which places lawyers in law departments to perform high level work, not as a placement service or temp agency but as a provider of legal services not saddled with the infrastructure of a large firm. With the firm's 100% utilization model (attorneys are only paid when they are engaged) and minimal overhead,  Axiom's clients can realize significant cost savings over traditional legal services.  Evidently without any knowledge of Axiom's business,  Berwin Leighton Paisner (BLP), a London-based firm, essentially took Christensen's advice by piloting under the BLP umbrella a new business,Lawyers on Demand, which is very much like the U.S.-based Axiom. 

The founders of this new service, also partners in BLP, acknowledged their initial concern about eroding the firm's traditional business, but decided that "even if it does start taking work from
traditional BLP, we can't bury our head in the sand. If we don't do that work, someone else will."  

That may be the ultimate justification for exploring new services and various ways of offering them.

Full post as published by Law People on September 28, 2010 (boomark / email).