Few would disagree that the role of the General Counsel, and the in-house legal team for that matter, is changing. A few years ago, they might only have got involved in disputes, or to approve new business initiatives. That has changed dramatically. Now, in-house lawyers play a crucial role in the day-to-day running of most businesses. The pandemic accelerated this change, when in-house lawyers were central to their companies’ rapid transition to remote working.
Our recent publication The Tech-Enabled Lawyer: The evolution of the legal function discusses in detail how in-house legal departments are recruiting fresh talent, taking on more responsibilities and becoming experts in certain practice areas. Crucially, in-house legal teams are growing at pace to acquire a similar level of specialist knowledge to what you’d expect from a traditional law firm.
There are many reasons to support expansion. In-house legal teams know their business better than their external counsel. And during the pandemic, many have cemented their positions as strategic advisors. Ambition is another driver: who wouldn’t want to grow their in-house practice to focus on more interesting, stimulating, and higher value work?
So, what has prevented in-house teams from diversifying in the past? Most would say it’s their day-to-day jobs: the essential, high volume, low value services that most in-house teams provide. They just don’t have time to execute a digital transformation-based growth strategy. However, this is changing. Most teams now recognise that technology can replace many of the services previously done by lawyers, for example using self-service and automated drafting tools. Gartner predicts that legal departments will have automated 50% of legal work relating to major corporate transactions by 2024, helping teams focus on more complex, specialised matters.
There are clear implications for private practice. Historically, law firms would compete for a place on their clients’ panels of trusted advisors, then build their relationships to win a bigger slice of the pie. If in-house teams can provide their own specialist knowledge – which was until recently the preserve of law firms – there will be a smaller pie to share externally. And it looks like the pie will carry on shrinking.
Of course, the growth of in-house legal teams does not spell the end of private practice. However, the legal industry must adapt to a new dynamic. While technology promises to alleviate the burden of low-value work, in-house legal teams currently lack knowledge and experience of these systems.
There are different ways they will bridge the knowledge gap. It will partly be done through recruitment: Gartner predicts that legal departments will replace 20% of generalist lawyers with non-lawyer staff by the year 2024, and many of the new roles will focus on technology. But in-house legal teams will look externally for advice on the technologies that will help them in the future.
Half of the legal teams in our survey are eager for their law firms to provide technology advice, creating an opportunity for law firms to diversify their revenue streams and build a different kind of relationship. However, just under half of our respondents have no idea what technology their law firms use.
If law firms do not provide technology advice, others will. Technology is at the core of the ALSP business model, and many in-house teams already use ALSPs. In-house teams won’t have to look far to find ALSPs ready and willing to step .
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