Disruptions in Global Legal Services Market: Opportunities for - - PowerPoint PPT Presentation

Disruptions in Global Legal Services Market: Opportunities for General Counsel

Professor Mari Sako

Mari.sako@sbs.ox.ac.uk General Counsel Netherlands, Amsterdam 7 October 2016

Agenda

What are the top three disruptions for what you do? How do you recognize a disruption? Alternative Legal Service Providers as disruptors? How can General Counsel respond?

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How to think about disruptions I

What are your top three disruptions?

“More for less” challenge Legal technology Globalization New entrants Deregulation

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How to think about disruptions II

How to recognize a disruption

Wars and crises Discontinuous change Innovation leading to creative destruction Disruption = doing new things that make old things obsolete Incremental but cumulative change, with a tipping point

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“More for less” challenge as opportunity for disruption “More for less” challenge has transformed the way GCs manage their legal resources (internal and external)

Use of law firms with alternative billing arrangements Use of alternative legal service providers (ALSPs) Use of legal operations staff within legal departments

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Use of Alternative Legal Service Providers (ALSPs)

Thomson Reuters Study in collaboration with Georgetown Law School and Oxford Said Business School

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RESULTS WILL BE RELEASED IN JANUARY 2017

• Providers of contract lawyers
• Examples: Axiom, Lawyer on Demand (Berwin Leighton Paisner), Peerpoint (Allen & Overy)
• Captive LPOs (legal process outsourcing)
• Examples: Clifford Chance (India), Allen & Overy (N. Ireland), Baker & McKenzie (Philippines)
• Independent LPOs
• Examples: Clutch Group, CPA Global, Integreon, Quislex, Unitedlex
• Managed legal service providers
• Examples: Axiom, Riverview Law, Elevate Services, Thomson Reuters

Managed Legal Services (Pangea3)

• Corporations adding complementary professional services
• Diversification by in-house legal teams to serve external clients
• Example: BT Law
• Accounting and audit firms
• Tax law, banking & finance, corporate restructuring, human capital
• Examples: Deloitte Legal, PwC Legal LLP, KPMG LLP, EY Legal
• Technology-based business model disruptors
• Online legal advice, data analytics, legal technology
• Examples: LegalZoom, Rocket Lawyer

What makes legal services “alternative” and “disruptive”? Not location, not provider’s identity, but how legal service is delivered differently.

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Categorizing ALSPs

Implications for General Counsel

How to remain in the driver’s seat

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1. Greater proportion of lawyers will become in-house 2. GCs are, and are expected to be, in the driver’s seat 3. Sourcing strategies will dictate the size of the legal department 4. GC’s skill sets will change

1. Legal operations directors take care of operational efficiency 2. GC can focus on adding value to the corporation

5. Take on the challenge to be a disruptor yourself

Implications for General Counsel

9 (c) Mari Sako, Oxford University 2016

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Is more insourcing the only way to meet the “more for less” challenge? No.

Huge variation in the 2010 study

Sector

Number in sample External to total legal spending

Construction

4 20% - 83%

Manufacturing

2 30%

Energy

7 12% - 57%

Financial services

11 50% - 77%

ICT

9 27% - 93%

Professional services

2 60%

Public sector

3 n.a.

Retailing and wholesale distribution

5 60%- 90%

Utilities

2 20%

Other*

7 40% - 60%

TOTAL

52 12% - 93%

Source: M. Sako (2010) General Counsel with Power?

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GCs as Externalizers vs Internalizers

Externalizers

• 90%+ reliance on

external resources

• Type I: ‘outside

lawyers who are more like in-house counsel’

• Type II: in-house

department proactively manages a network of law firms (‘legal community’) Mid-rangers

• 40-60% reliance on

external resources

• ‘Where do you want

to be in the middle?’

• Aim: size of in-house

department determined by capacity and lawyers’ careers Internalizers

• LT 20%reliance on

external resources

• Aim: tight budget

control + intimate knowledge of internal clients

• Shift to in-sourcing
• ften accompanied

by REDUCTION in in-house lawyer headcount Source: M. Sako (2010) General Counsel with Power?

What determines the internal-external balance?

Make-and-buy balance

Relationship-based contracting strategy

Contracting with law firms can be challenging

Bargaining-based contracting strategy

Supplier portfolio design

• Large no. of law firms
• Short-term relationships
• Narrow range of practice

areas per firm

• Small no. of law firms
• Multi-year relationships
• Broad range of practice

areas per firm

More insourcing More outsourcing

1. Greater proportion of lawyers will become in-house 2. GCs are, and are expected to be, in the driver’s seat 3. Sourcing strategies will dictate the size of the legal department 4. GC’s skill sets will change

1. Legal operations directors take care of operational efficiency 2. GC can focus on adding value to the corporation

5. Take on the challenge to be a disruptor yourself

Implications for General Counsel

13 (c) Mari Sako, Oxford University 2016