A Legal Profession Catch 22 Stymies Cost Efficiency for Now, But the C-Suite Can Fix This Problem


The Point

You have two important, but different, types of resources to address legal issues facing your business:

1. LAWYERS: For advice that requires legal judgment to guide business decisions, your company needs accomplished individual attorneys (see July 27, 2022 post). You can’t get legal judgment from an automated platform.

2. AUTOMATED PLATFORMS: Fast, (relatively) cheap, and accurate performance of routine, recurring legal tasks calls for business process experts and technology of the sort operated by alternative legal service providers (ALSPs) (see August 3, 2022 post). Yet law firm junior associates and in-house counsel are the primary go-to sources for routine, recurring legal work. Not ALSPs and their automated platforms.

On routine, recurring legal tasks, the business faces a CATCH-22: The legal profession does everything it can to keep automated platforms and practicing lawyers from working together under one organization (see here). Outside of “reform” states Arizona and Utah, only licensed attorneys may hold an ownership interest in a law practice. So it’s no surprise that such automated platforms within ALSPs comprised only 1.5% of the global legal market last year (see here).

You can fix this. The marketplace affords workarounds to bar authorities’ protectionist impediments, if business leaders are willing insist on them.

This Matters to Your Business

Automated platforms are mostly not about practicing lawyers. Instead, they’re about project managers, legal operations professionals, and technology experts who come together to systematize those legal tasks that are routine and recurring.

That doesn’t mean that practicing lawyers have no role at all in ALSPs’ automated platforms. But, in contrast with law firm or in-house counsel work, the input that ALSPs and their automated platforms need from practicing attorneys is occasional and episodic.

Here, then, is how the Catch-22 works:

  • THE BAR AUTHORITY RULE: U.S. legal profession’s longstanding opposition to anyone other than a licensed lawyer having an ownership in a law practice amounts to an all-or-nothing rule. With notable exceptions in “reform” states Arizona and Utah, none of an ALSP’s client-facing work product can involve any advice of a licensed attorney who works for the ALSP, unless the ALSP is 100% lawyer-owned (and none are).
  • THE REALITY OF ALSP OPERATIONS: 100% automation of legal tasks — with no involvement of a licensed attorney — is not possible in even the most advanced automated platform for recurring, routine legal tasks.

An ALSP cannot comply with the prevailing bar authority rule while making even minimal use of licensed lawyers in their client-facing services.

Because …

The numbers show that lawyers in-house and in law firms make relatively little use of ALSPs. The legal profession in-house and in law firms continues to slow-walk adoption of cost-efficient, fast, and accurate workflow processes and technology.

Business leadership needs to step in to make the corporate law function more disciplined in its selection of talent and resources. Hire law firms and create lawyer positions in-house only for tasks that require highly developed legal judgment. And hire ALSPs and other providers of process work and technology for the routine, recurring tasks.

The legal profession, meaning in-house counsel and law firms, are not making such disciplined alignment of tasks with resources on their own. The C-Suite needs to use its management authority with in-house counsel, and use the company’s purchasing power with law firms, to insist that they do so.   

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