Blog Post

Wild predictions from a scary fool?

Crispin Passmore • Jun 13, 2019

My speaking notes from the London Legal Market conference

I was asked by Neville Eisenberg of Bryan Cave Leighton Paisner to speak today at the London Legal Market Conference. This blog is a mix of what I planned to say, what I think I might have said in the heat of the moment and what on reflection I wish I had said. It might not be fluent (and lots of is it in note form) but it is more fluent than the live version. I was asked to address two broad topics – my perspectives on the legal market at the start of the panel, and my predictions for the future at the end of the panel. Who said “ prediction is very difficult, especially if it's about the future ”?

So shoot me down...


Perspectives on the legal market

In The Sun Also Rises by Ernest Hemingway, one character ask another:

“How did you go bankrupt?" The reply is: “Two ways. Gradually, then suddenly.”


I don’t like to talk about firms going bankrupt - I want legal businesses to think that I offer something a little more positive than staving off bankruptcy. So I prefer to talk about change. Change happens in two ways: gradually, then suddenly.

If you are here today, clearly bankruptcy not happened suddenly, so I will skim across the legal market and see if change is happening gradually.


 - Alternative Business Structures now make up over 10% of law firms. The end of the world that some anticipated has been greatly exaggerated.

 - Multi-disciplinary practices are thriving – not just at the big 4 but beyond that to the next layer and into the high street. Turnover of big 4 legal is significant – at least one is into the top 100 on revenue and pushing at the top 50. Their IT budgets may rival the turnover of the largest law firms. This is not a re-run of the last time the accountants came to visit. They do not own law firms - they run truly multi disciplinary practices that, with education reforms now impacting, will be built from the bottom up , with collaboration at their heart.

 - IPOs no longer remarkable - who can remember the whole list of floated firms? They are hiding in plain sight.

 - Private equity - not even noticeable, think United Lex and its £500m or LoD

 - unregulated market - every bit of legal market touched from retail to corporate.

 - lawyer market place platforms - such as Axiom

 - platforms for end to end management of legal work for clients - such as EY Riverview

 - tech solutions for specific work –such as Diligen for contract review, NDAs and much more

 - and distributed law firms that change the model, change the feel - such as a regulated Keystone Law or an unregulated Aria Grace Law

 - barriers breaking down between all of these models - so collections of business mixing all the above within a group. Those that started in unregulated market move up the value chain such as Elevate acquiring Halebury.


 - This is not just happening in the UK. Regulatory reform or liberalisation of the guild of lawyers is happening internationally. In the US we might see California, Utah and Texas all take the leap in the coming years. Canada, Singapore and Australia moving faster too. There is just this Brexit stuff to contend with and I don’t make predictions on that anymore.

 - in house GCs are changing approach to buying and managing solutions - not just shifting the boundaries of what work goes ‘up, in, or out’ but starting to use platforms that give it visibility across their business as well as across their legal services providers.

 - real options for clients that are increasingly quickly. And the size (and purchasing power?) of those in-house teams is getting pretty scary – think Accenture having more lawyers in house than almost every law firm in the world.


 - when I ask younger lawyers in city firms who their competitors are, far too many rack their brains, thinking what law firm name would flatter them most - very few list any of the different sorts of business I have mentioned, the ones that their customers think are their competitors. I am sure law firm leaders are not that complacent.

 - when I think about my new consultancy, who my clients are and who is in touch to explore what we might do together, I realise it is a pipeline of disrupters, their advisers and funders. Many came to me rather than me finding them - often speculatively just to see if there is anything we can learn on together, and some because they want to try something different and want some guidance. Only one ‘traditional’ top 100 law firm has contacted me – and that is BCLP wanting to think about opportunities and innovation and how they relate to regulatory reform. You might say that avoiding me is probably why they are top 100 firms - advice from me might move them into the top 200!!


So my view is the legal market is changing gradually...

...but I think it will hit each one of us suddenly unless we run ahead of our clients.


Horizon scanning or wild predictions

We have heard about change and the increased choices GCs and FDs have. Undoubtedly that is more competition for law firms. But rather than think about sustaining the law firm into the future let’s look forward by asking a more fundamental question.


Why do law firms exist? It takes me back to studying economics and reading about the theory of the firm - something that as far as I can remember is a difficult thing to explain. One explanation might be that law firms exist to make the legal labour market intelligible to clients. They are a broker of talent, a comparison site of the labour market, a way to share costs of organising, of systems, process and knowledge management across clients efficiently. That is quite compelling. Or at least it has been up until recently.


Let me speculate on a future world of work and then make some wild guesses about the future.

The future of work is less and less about organising labour through firms. We are on the cusp of technology threatening to replace firms as the way to match labour to clients, match talent to clients, organise systems and process that underpin bespoke services. Uber is the classic. But something like 90% of Netflix staff are not employed and you will all have other examples.

This seems to be spreading across the labour market. The question for law firms is what makes us different, able to buck that trend. Or perhaps for those that embrace the future the question is why on earth would we want to buck that trend? It struck me an earlier panel were talking about overcoming the challenges of getting partners into open plan offices – just as the rest of the world might be abandoning offices as we currently know them.

Scanning the horizon, I expect to see some emerging themes:

 - Technology underpins legal services. If it can reduce the cost or replace any element of bespoke services, it will do so. Not in a magic hype way, but bit by bit. Gradually, then suddenly.

 - This does not mean less lawyers or less people in the legal labour market - I predict growth. I expect over 200,000 practicing lawyers by 2025. The numbers of solicitors even grew during global financial crisis and through the 1970s. They have grown every year since 1960 other than a near standstill one year some time back. They have almost doubled since turn of century.

 - growth of market revenue will be significant – though the inevitable downturn at some point may cause a temporary dip.

 - as markets mature, they tend to polarise - mass production and elite bespoke. Error most business and individuals alike make is we think what we do is elite/bespoke and usually that is a smaller market then anyone ever imagined. Sadly, that covers me too. So, the labour market will polarise and the legal business market will polarise.

 - the middle market needs to decide its own future before suddenly arrives. Get big, get niche, get out?

 - new entrants are trying to make everything mass produced while incumbents are trying to convince clients it needs to be bespoke


So actual predictions...

 - liberalisation grows the market substantially - more revenue, more lawyers, more legal services

 - big law retreats up pyramid but becomes more profitable for the top lawyers in those business

 - it will be chased up that pyramid by competitors: tech, process, outsource, MDPs, global business in law etc

 - will take another 20 years but it is happening gradually - though many wrong turns/dead ends/failures along the way no doubt

 - fine for current partners if they don’t want to do anything radical - can sustain profit per partner but they leave no legacy business

 - new entrants are trying to build sustainable business - ie capital growth

 - there will always be room for elite law - but how different is that to barristers in chambers? Is it their relationship with different types of services?

 - partnerships between law firms and what we still call new entrants (I think Axiom is 20 years old this year ) will develop radically over next five years in the UK and US

 - consolidation - 200th biggest firm in The Lawyer list is about £10m. It is like weaving in the 19th century.

 - consolidation of the top 200 might be matched by almost total fragmentation of the bottom with lawyers working through platforms, as freelance lawyers.


 - who wins is who owns the client. That used to be law firms. They are losing that trusted business advisor role. Can they regain it? Or will platforms be in charge?

 - legal advice is a product not a market: the market is problem avoidance or resolution, or perhaps risk management. I never heard a CEO say let’s spend more on having legal problems.

 - we will reach a tipping point when most newer lawyers choose the new models over the old and think of law firms as alternative, while the way they now work is mainstream.


At that point some business owners will realise that while the market has been changing gradually , suddenly they don’t have a business.


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