What News in London? An Era of Ferment…

Looking back, April has been a rather exciting month in the UK. Whether it’s a result of the fresh spring air or the steadily approaching implementation of the Legal Services Act, legal professionals in the great city of London seem to be well on their way to preparing for the rise of alternative business structures, public financing, and outcomes-focused regulation.

The Solicitors Regulation Authority (SRA) kicked off the month with the release of the new Code of Conduct. No major surprises (I presented on the regulatory implications for LPO last fall at a Law Society event). But, LPO does seem to be a growing focal point with the SRA.

While UK law firms face of number of implications resulting from these regulatory adjustments, the primary shift is that the SRA is looking to firms to be more transparent in their dealings with regulators. In particular, law firms are to be more open about their relationships with third-party legal vendors domestically and abroad. In this window before the implementation of the Act, firms are best served by taking an introspective look to review their professional obligations inherent in their work with LPO vendors.

Keep an eye out in the Fronterion Forefront newsletter for implications to UK law firms’ work with LPO vendors and what these regulatory shifts are brining. (Email forefront@fronterion.com to sign-up).

 

Despite the weather, the news in London is anything but drab. Here is a quick news round-up for the month:

Herbert Smith – Something we’ve long been covering is the strategic shift of Herbert Smith to a nearshore delivery centre in Belfast. April was the announced date of the “go live” of the centre.

Irwin MitchellIrwin Mitchell confirmed their intentions to float (in essence going public). Perhaps equally significant, are the changes in the law firms’ view of services. They appear to be shifting certain service lines from hourly utilization to more packaged consumer legal products. When firms change their focus from services rendered hourly to legal ‘products’ it results in a profound paradigm shift. The goal moves from ‘how can we render these services in the best manner possible’ to ‘how can we render these services in the best manner possible AND do so using the most efficient approach’. Whether performed internally or through collaboration with third-party vendors, this focus on efficiency creates fertile ground for innovations that could create a significant impact on the broader legal sector.

Taylor WessingTaylor Wessing announced a semi-standalone business unit offering a self-described ‘alternative’ to legal outsourcing. One thing that I’ve often mulled about recently (including a piece by The Lawyer) is whether we will see law firms acting like LPO vendors or LPO vendors acting more like law firms. Between this announcement and several other City firms moving forward with onshore or alternative captive delivery strategies, we’ve seen a marked shift of law firms acting like LPOs than the reverse. Whether the Taylor Wessing engagement is able to make this ‘stick’ with their clients or even other law firms is yet to be seen, but based on the comments of an executive in the new venture, it is intended to push the innovative boundaries, “I don’t think there are any limits on where this could go.”

Pannone – Similar to the paradigm shift seen by Irwin Mitchell, Pannone announced their offering of white label legal services (providing services under another organization’s brand). The same focus on efficiency internally and through third-party vendors for the delivery legal ‘products’ may be even greater in scenarios such as this where services are effectively white labeled across several clients.

 

Era of Ferment

When viewing the UK legal sector in relation to the innovation life cycle, the recent events above seem to indicate that we have shifted from (what we management consultants refer to as) an ‘Era of Incremental Change’ to an ‘Era of Ferment.’ The new Era of Ferment in the UK legal market is marked by turbulence and experimentation as firms demonstrate a growing divergence of how new methods and innovations should be utilized, configured and presented to clients. This will continue for some time until a dominant model (or models) emerge.

What is the role of LPO vendors in this Era of Ferment? Certainly third-party vendors will be involved in this transition, but LPO firms themselves will be required to keep pushing the innovative cusp of the legal sector. Simply selling on the basis of cost savings and gains from labor arbitrage alone may no longer be enough to stay ahead of the well-resourced and increasingly focused law firms and their offshoots.

If the Brits know one thing, it’s fermentation. Keep an eye on this market.

Written by Fronterion