Legal Spend Just Another Corporate Cost: The Evolution of the Practice of Law from Profession to Business

Ari Kaplan, who was the keynote speaker last week at the ABA Techshow, recently reported on the results of his survey about client expectations and shifting business models in the legal profession. The Evolution of the Legal Profession is based on his interviews of 30 practicing lawyers, academics, in-house counsel and CEOs. The legal profession is experiencing a sweeping evolution that will be marked by permanent changes to billing structures, firm organization and value and efficiency expectations from clients according to Kaplan. Some stats from the report:

• 70% agreed that while the economy has always had an impact on the practice of law, the current shift is different. 74% believe the shift will be permanent.
• 62% agreed that the accelerated growth in law firms and the rise in legal fees led in whole or in part to the current state of the market.
• 85% now use alternative billing, including fixed fee arrangements and 85% had heard of instances where a corporate client will not pay for first year associate work performed on their cases.

Wait a minute. Corporate clients won't pay for first year associate work!

BigLaw: A Business Masquerading as a Profession.The survey also reports that 92% feel that client expectations have changed. Legal spend is being viewed like any other corporate cost by general counsels. Does that mean legal work has been commoditized? At a minimum, it means corporate clients expect efficiency, something that conflicts with the traditional billable hour model and current capital structure of most large law firms. Perhaps one of the most telling remarks that captures the changes taking place in the law firm-corporate client relationship comes from Jeffrey Carr, Vice President, General Counsel and Secretary for FMC Technologies: “In some ways, we have a business that is masquerading as a profession.” If so, there is a real opportunity here for law schools to produce a new breed of attorney if the legal academy is willing to radically transform itself. Legal doctrine plus legal skills plus legal tech-driven efficiencies might be the order of the day. In a way, this reminds me of the transformation that took place in library science education in the 1980s. [JH]