The quarterly publication of the International Legal Technology Association
Issue link: https://epubs.iltanet.org/i/34686
coming to an end.” take these common forms of disaggregation one step further. Rather than just acting as a tool to be deployed by clients and their firms, LPO firms deliver work product to their clients. Changing Industry Dynamics As a result of the growing popularity of the new LPO approach, law firms and in-house legal departments alike are still grappling with the dynamics of the tripartite relationship between counsel, client and LPO vendor. While all three parties are still trying to find their place — including a growing divergence in law firm strategies regarding their approach to commodity level work — a number of trends are favoring LPO. In addition to the validation demonstrated by respected players like Thomson Reuters entering the LPO market, a number of other trends strengthen the position of LPO. These include the growing demand for price certainty, both from LPO and law firms offering alternative fee arrangements (AFAs); improved technology, which eases communication across long distances; ethical clarity regarding third-party legal vendor collaboration; and the forthcoming changes in the United Kingdom with the Legal Services Act and alternative business structures (ABSs), which could tilt the legal profession toward a more innovative paradigm. Further changes to the firm-client dynamic are simply a result of the different approach and increasingly divergent value proposition of LPO vendors. For example, contrary to popular belief, LPO firms aren’t simply competing on cost. While cost pressure is undoubtedly a driver, outsourcers can offer better capacity management, more defensible quality standards (based on highly delineated standards and repeatable processes) and often higher quality work based on leveraging certain cultural advantages, such as the contentment of overseas attorneys working on projects that law firm associates might consider boring, repetitive and mundane. What Does Partnership with a Legal Publisher Mean? The acquisition of Pangea3 by Thomson Reuters has been a catalyst for asking many of these questions. Law firms have historically been able to defend against LPO vendors because of the outsourcers’ small size, tight budgets and limited sales and marketing expertise, newness to the legal industry, and the plain-old outlandishness of having work done by strangers overseas. But ownership by Thomson Reuters obviates most of those arguments. The company is in a strong financial position with big marketing budgets and experienced management that knows how to sell legal-related services. The company is highly trusted by general counsel and already considered an “approved vendor” by legal and procurement departments. If anyone has the expertise, capacity and money to deliver the message of disaggregation, it is the large legal publishers. But what does this mean for Thomson Reuters’ law firm client base? Are they now competitors? Despite the lack of fanfare, legal publishers have been “competing” with law firms for many years. All three major legal publishers (Thomson, LexisNexis and Wolters Kluwer) sell electronic billing software, which is designed to help clients reduce law firm costs. In fact, the publishers’ core research databases are themselves efficiency tools that allow attorneys to do more work in less time, and thus bill less. How Should Law Firms React? Law firms have frequently competed thus far by calling into question the viability of LPO vendors or the quality of their work, or claiming LPOs by nature violate legal ethics. Some take a more tactful, but equally intentioned, approach, expounding upon the superlative sophistication of every piece of work performed by their firm. In short, the argument is that Peer to Peer the quarterly magazine of ILTA 77 providing legal- related services that need not be done by expensive, partnership-track attorneys are “The days of