3 trends in the legal industry CFOs cannot ignore - by Yvonne Wakefield

The legal profession has remained essentially the same for the last few centuries. One could be forgiven for thinking that, other than the introduction of fax and then email for communication purposes, the profession has shown little aptitude for adapting to changing times.

This Expert Insight is written by Yvonne Wakefield, founding CEO of Caveat Legal. She earlier wrote a piece titled 5 ways CFOs can save costs on legal services, which is available here.

As budgets have been steadily squeezed over time, clear trends have begun to emerge, and certain parts of the profession are becoming increasingly dynamic and showing signs of extensive change - for the ultimate good of the markets that they serve.

The first significant trend CFOs should know about, is the use of technology to add efficiency to the profession.
Tools include those for time capturing, practice and workflow management, e-discovery and document review, case law and other source research, automatic document generation, document collaboration, and invoicing and collection.

The legal tech space has become a thriving industry of its own in the US, with frequent conferences and trade shows aimed at showcasing efficiency-adding products to law firms and corporate legal departments. The fact that attorneys attending such events are awarded Continuous Legal Education (CLE) points, shows the importance placed on legal tech education by the authorities.

The tools now available hold the promise of lawyers being able to greatly reduce their time spent researching and preparing, as well as drafting and reviewing work. Lawyers with their clients' best interests at heart should be embracing these tools where available, which will ultimately bring the cost of their services down and improve the quality of the products delivered.

While earlier iterations of these technologies were incapable of handling the nuances particular to the profession, more recent versions are showing signs of having overcome these shortfalls, and now even claim to be superior to traditional methods because they eliminate human error. Although there will always be a need for the ultimate exercise of human judgment, which cannot be done by machines, the preparatory work enabling that exercise of judgment will be vastly streamlined.

The second trend is the move by lawyers to use innovative business models to offer legal services at significantly lower costs than traditional models.
These alternative legal service providers, dubbed 'New Law', have identified aspects of the traditional law firm model that contribute to high overhead structures - which are then passed on to clients - and found creative ways to do without them. The move is enabled, to different extents, by the intelligent use of technology.

There are a range of new legal service providers which are not set up as firms, but which boast similar quality legal services to the large firms at rates as much as half that of theirs. They are able to achieve this by doing away with expensive premises and teams of support staff, and focusing on only the most important overheads, like PI insurance. Importantly, they are becoming very attractive homes to leading lawyers who have decided to opt out of the large firm environments but continue doing high-level legal work on their own terms. Interestingly, in some of these new models, the lawyers actually take home more per-hour than they they did when they were being charged out by their erstwhile employers at double. When done well, these service providers offer a win-win arrangement to all.

The third trend is the emergence and consolidation of legal process outsourcing (LPO) businesses, which provide cost-effective solutions to high-volume document review and other processes traditionally carried out by junior fee-charging professional staff.
The days of dishing out professional fees for low-level document review in due diligence investigations or discoveries for trial, seem to be coming to an end. With the added efficiency of technology, these providers boast outcomes more cost-effective and more reliable than could be expected through traditional means.

The discerning corporate client of today now has more choice as to the ultimate recipients of legal spend and can attain a more streamlined and cost-effective operation, without compromising on quality or increasing risk.

The landscape is changing from the staid picture of the past to a much more dynamic one of the future, and the end result for clients is lower legal spend, finally.

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