How Law Firms and Legal Departments Could Survive the Next Wave

1. Wave 1

Once, law firms were considered the exclusive providers for legal services. However, since a few decades legal departments are steadily growing and meanwhile absorbing up to 75% of customers’ overall legal work. This development is now up for discussion. Obviously, customers must have been dissatisfied with the services the market offered and therefore decided to act and solve their problems themselves. More interesting, however, is the question, why law firms as formerly exclusive providers allowed to lose a potential market opportunity – was it strategic intent, disinterest or simply an oversight? Fact is that they lost a very substantial market share, presumably forever.

Wave 2

But this is not enough. Now, a second wave of so-called alternative legal service providers is ready to rock the market and challenging today’s key legal service providers, i.e. law firms and legal departments. These alternative providers include, for example, financial services companies, legal protection insurance companies, the legal arms of the Big Four, and whatever can be summarized under the new terms NewLaw and LegalTech. They have started to absorb a first share of the existing legal market and they are definitively willing to further grow rapidly.

Hence, the question is, how both traditional legal service providers can prepare to keep their position. In particular for law firms the challenge is even more serious, since – from a customer point of view – they seem neither better nor cheaper than the other two alternatives. For sure, there are interesting times waiting ahead.

For an easy to read chart and for more information please refer to the two articles in BusinessLawMagazine, No 1, March 1, 2018 (English) and Anwaltsrevue, 1/2018 (German).

Photo by Peter Chamberlain on Unsplash