Legal practice at the crossroads…

Increased competition, rapidly advancing technology, an ailing economy and a new round of regulation are stacking up to pile pressure on the UK legal sector, writes Charles Christian

Forget the cosy Rumpole of the Bailey image of the law – that is fiction, and fiction based on the legal world of more than 40 years ago. In today’s world of civil litigation, the legal community now has to deal with concepts, technologies, threats and challenges that were unthinkable even a decade ago.

In particular, although the role of law firms as external legal advisers remains undiminished, in-house legal teams have been transformed and are increasingly crossing the divide from being suppliers of legal services to becoming providers of strategic business advice.

In fact, general counsel – the senior lawyer in a company legal team – will typically now have main board responsibilities.

This is a timely and necessary development given the transformation in the legal sector. For example, there is the trend for increased regulation and compliance not just in the financial services industry, but in corporate life generally, with a steady flow of onerous new laws and obligations coming out of Westminster, Europe and, for multinationals, the United States. Nobody wants to become the next Enron or Arthur Anderson.

The Jackson reforms are going to change dramatically this country’s civil litigation landscape

Then there is the issue of security, with the last few years seeing the transformation of computer hackers from annoying amateurs to state and commercially sponsored thieves of corporate secrets and intellectual property. Today even law firms are being deliberately targeted by hackers.

In the UK, we also have the impact of the Jackson reforms on civil litigation. These have been described as the UK legal sector’s own “big bang” and at this early stage – they only came into effect in April – it is clear they are going to change dramatically this country’s litigation landscape. Once again, no general counsel or corporate law firm can risk being wrong-footed by these changes.

Along with this, we are seeing the emergence of such IT-related concepts as technology assisted review (TAR), predictive coding and eDiscovery (also called eDisclosure), which seek to help litigants and the courts cope with the rise of electronically stored information (ESI), such as corporate databases and e-mail archives, where millions of documents may need to be sifted for digital evidence.

And, with the economy remaining firmly on the agenda for industry and commerce, an increasing challenge for all lawyers – for general counsel wanting to keep their corporate legal budgets in check and for law firms wanting to compete for their business – we are seeing the rise of alternative ways of provisioning legal services, such as legal process outsourcing (LPO) that are set to radically and permanently change the way the UK legal industry and corporate clients interact commercially.

Running as a common theme through all these developments is the concept of risk management. Corporations and law firms alike dare not risk breaching regulatory controls for fear of the punitive penalties and reputational damage that would arise. The same considerations apply to the risk of being the victim of hacking and falling foul of the new civil litigation rules.

As for eDiscovery and ESI? If a corporation or its legal advisers have not mastered the terabytes of data on their hard drives, there is a very real risk that they may have overlooked the proverbial “smoking gun” that could shoot down their chances of success in litigation. But this is just the start of a seismic shift in the legal services market.

Then there is what has been called the “new normal”, the view that the financial pressures placed on corporate legal teams, including “shareholder value”, is forcing general counsel to take a far harder and sceptical look at their external law firms’ bills than they might have done in previous years.

It is also prompting corporations to question the way legal services are delivered.

According to the legal futurist, adviser to the Lord Chief Justice and The Times columnist Richard Susskind, for too long legal services have been a “distress purchase” that corporate clients have to buy when something goes wrong.

They are the ambulance waiting at the bottom of the cliff to pick up the person who has fallen over the edge. Professor Susskind, however, advocates lawyers need to shift from being reactive to proactive, in effect by providing a barrier at the top of the cliff to prevent accidents from happening in the first place.

A similar view is expressed by the business consultant and futurist Dr Patrick Dixon. He suggests both general counsel and law firms must take a more holistic view of legal advice and appreciate that in many instances a corporation may win the narrow legal battle, but lose the wider reputational war, particularly in these days of social media when bad news can rapidly spin into a consumer reaction.

The legal industry is facing novel threats and challenges it must either embrace or be destroyed by. In this changed environment, the old cosy ways of working are no longer adequate and lawyers must instead focus on greater professionalism and efficiency.