Understanding the legal ecosystem

Having signed off my last blog post suggesting that a better understanding of the environment within which organisations work is a necessary precondition to   better management, I am planning a series of posts that will look more closely at the legal ecosystem of which law firms are a part.

It is important to recognise that the connections between different components of the system (lawyers (at all stages of their careers), firms, alternative providers (in any form), clients, suppliers, and so on) affect the ecosystem as well as being part of the context against which any single component operates. One reason for trying to describe what is going on is that some of the commentary in this area focuses too closely on the actions of one set of actors without considering their impact on others and (more importantly) vice versa. The commentary also often tells a different story from what is actually happening. Jeremy Hopkins’s recent post on Public Access to the Bar provides a lucid example of the latter, showing that information about barristers attending courses to qualify for Public Access has been blown up into assertions about 50% of the Bar moving into work that has traditionally been the preserve of solicitors. Jeremy has a different view:

Where I’d suggest the debate has got a little hysterical, is the widely reported perception that the increase in Public Access authorisations represents a wholesale strategic re-positioning of barristers’ business plans with a view to a major onslaught on solicitors’ territory. More likely, it is a sensible investment of relatively small amounts of time & money to put oneself in the frame, without obligation, for possible opportunities while meeting mandatory CPD requirements.

Rather than dealing in hypotheticals, then, a proper assessment of the legal environment needs to focus on what is actually happening. That also means that one can only describe the current situation.

It is worth being clear about the limits of my inquiry. This is a partial overview (in both senses of the word). I can only write about what I know — there may be other factors invisible to me that affect how specific firms or practice areas will develop. Also, I am only concerned (for now) with legal practice in England and Wales — and primarily commercial legal practice. Nonetheless, I hope a general overview will provide a useful starting point for firms and lawyers to think carefully about their own more detailed ecosystem, how it may change, and what they might do to influence or mitigate those changes.

So what are the relevant components of the legal landscape? I have grouped them into three rough categories: clients, people, and context. (This grouping is purely for convenience, and allows me to have a nice Venn diagram here. It is not a normative statement.)

I want to explore each of these in more detail in later posts, but here is a quick summary of how they interact.

In classic Coasean terms, the firm exists to do work efficiently. Clients sit on one side of this equation, and the people within the firm on the other. ‘People’ includes those directly employed in doing the work requested by clients as well as those providing services to the firm (this is an increasingly permeable distinction, and I will look at it in more detail in the relevant post).

The firm needs to balance supply (people and other resources) and demand (client instructions). This isn’t a simple thing to do, because of all the other things that firms have to content with — the context within which they operate. That context includes the material that lawyers have to work with (the law), professional regulation, technological and other change, and the pressures of the market.

Managing the firm, and planning for its future, requires law firm leaders to understand the complex interactions in each of these areas, as well as across the boundaries. For example, changes in the regulatory sphere might prompt a client to change the nature of their in-house legal team, resulting in less work (or work of a different kind) flowing to the firm. Likewise, third party suppliers of legal information or technology to firms and clients can affect the way each relates to the other by changing their commercial terms or the products and services themselves.

Most of this is not unique to law firms, but there are some special features of legal work or the legal market that I want to draw out over the next few posts. The first of those will look at the part clients play in the legal ecosystem.