The times they are rapidly and dramatically changin’ —and that disruption is going to redesign your career!
Here’s a clue: Stephen Poor, chairman of Seyfarth Shaw has joined Twitter (@stephen_poor), and he’s writing essays on Medium.com at Rethink the Practice.
Poor is not the only leader paying attention to the recent survey from Altman Weil, “Law Firms in Transition 2015,” that asked managing partners and chairs at 797 U.S. firms with 50+ lawyers why they weren’t doing more to change their business models. “Sixty-three percent said it was ‘because clients were not asking for change,” Poor wrote in an essay for Bloomberg BNA’s Big Law Business.
That survey, as well as the “2015 Litigation Trends Annual Survey” from law firm Norton Rose Fulbright, reveal staggering results—including a sharp reduction in business for law firms. For starters, corporate counsel are dramatically reducing the number of law firms on their rosters—while simultaneously reporting a significant increase in the number of mass litigation and regulatory investigations.
Do the math: That translates to an increase in corporate legal budgets and a shift to using technology to improve legal service delivery.
The Norton Rose survey found that the number of U.S. companies with an annual litigation spending of $1 million or more “rose significantly between 2012 and 2014.” The share of companies with legal budgets exceeding $1 million increased to 69 percent from 52 percent in 2012, and 34 percent reported budgets of $1 million to $5 million—up from 26 percent two years ago, the survey said.
And yes, the legal renovation crowd was right: the legal industry is beginning to see seismic shifts in the way legal services are delivered. The Altman Weil survey asked firms what they were doing to increase efficiency of legal service delivery. Fifty-eight percent of all respondents—and 64.5% of law firms of 250+ attorneys—said they are using technology tools to replace human resources.
Nearly 93 percent of law firm respondents said they believe a focus on improved practice efficiency will be a permanent trend going forward; 84.3 percent said they think technology replacing human resources will be a permanent trend in the future.
What’s the impact of these findings on your career?
This the beginning of the rise of the boutique law firm that can be disruptive, innovative and and fully address the wants and needs of corporate counsel. A reduction in the number of outside counsel used by the Fortune 1,000 is more than a shot across the bow, it’s a demand for change.
The Cowen Group predicts the elimination of 25 percent of associate roles and 10 percent of partner roles by 2020. At the same time, the growing use of artificial intelligence, machine learning and automated analytics will create a human capital gap for legalists, legal technology professionals, tech-savvy attorneys and legal leaders with new skills, competencies and experience.
This workforce shift is similar to the reduction in force of old school accounting clerks and bookkeepers when Microsoft Corp.’s Excel and Inuit’s QuickBooks were introduced. You don’t need 100 accounting clerks when you have an Excel spreadsheet, accounting software and a talented administrative assistant. New technology—including predictive tools, legal analytics and computational law—will dramatically reduce the numbers and change the roles of lawyers as we know them today. This increase in technology will give rise to a new breed of attorney/partner/legal technologist and legal leader.
We don’t have specific examples yet regarding what roles will be displaced, but it’s similar to robotics in the auto industry. We could not foresee which jobs were going away, but a quarter of those jobs were ultimately eliminated, rendered obsolete by technology.
New roles and opportunities and an enormous human capital gap will arise in the next two to five years. Just like corporate America was the first and fastest to adopt Microsoft Office in the ’90s, corporate America will lead the way in adopting business intelligence, predictive analytics, computational law and innovation in the running of internal law departments. That’s how big corporations grew—by continually improving and fine-tuning processes with an eye on their bottom line.
What’s next? In the coming months, special consultant Monica Bay and I will offer a prescription for your career, a career manifesto—The 2020 Lawyer: Legal technologist and leader.
—David Cowen is the president and managing director of The Cowen Group, based in New York City. Twitter: @thecowengroup