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4C Explores the Legal Services Market

Legal Services Newsletter May2012

Legal Services Act 2007: Feeling the ChangeSince the introduction of the Legal Services Act,Procurement professionals have been waiting to see ifthe new measures would open up the legal servicesmarket. The aim of the legislation is to liberalise andregulate the market and encourage more competitionwhilst providing a new route for consumer complaints.

The Act should encourage the emergence of newfirms with different cost structures and commercialpropositions, to challenge the more establishedcompanies. Whilst we may be some way from thatscenario, the recent launch of Riverview Law indicatesthat the measures are beginning to take effect.

Riverview Law, the trading name of LawVest, is ownedby AdviserPlus Business Solutions, DLA Piper and anumber of individuals. The company is expected to beone of the first to take advantage of the AlternativeBusiness Structures permitted by the Legal ServicesAct.

The commercial offering from Riverview Law is verydifferent to that of traditional firms, and can offer

Fixed Prices based on the size of the client and servicesprovided. Other innovative offerings, including moneyback guarantees in certain circumstances, seem toindicate that these new suppliers will be able tocompete with the traditional players.

This could be good news for Procurement Managerswho will now be able to take a different dynamic intoconsideration for their sourcing work. These newdevelopments would certainly seem in keeping withthe new legal supply landscape depicted in RichardSusskind’s “The End of Lawyers?”.

A Look Back at Susskind’s Legal BestsellerWidely acclaimed by academics and legal professionalsalike, Richard Susskind’s bestseller explores thepotential impact of numerous recent developments onthe legal profession. Susskind was one of the first toconsider the possible ramifications of informationtechnology, communisation, outsourcing and externalinvestment on the legal profession. “The End ofLawyers?” envisages a bleak future for those whorefuse to embrace innovation but hints at a world ofpossibilities for practitioners willing to make changes.

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4C’s Breakfast Debate: "External Legal Services -best bought by Procurement, or the In-HouseCounsel?"With legal expenditure coming under increasingscrutiny, 4C assembled a group of procurement andlegal professionals to debate the pros and cons ofsourcing external legal services with procurementinvolvement versus the in-house legal counselsourcing the services themselves.

Antony Ray, Senior Category Manager at 4CAssociates, argued that procurement was best placedto secure legal services whereas Emmanuelle Recoules,Legal Director at SITA, debated that in-house legalteams were more effective acting on their own. Thesession took place at The Paramount, Centre Point,London.

Ray opened the debate by stating that traditionally,legal services spend had been off limits toprocurement. However, with organisations becomingincreasingly concerned with expenditure,procurement has begun to play an important rolewithin the legal services department. He stated thatin-house counsel does not consider cost of services atop priority and that procurement can help businessestake this element into consideration.

Ray felt that the key to effectively sourcing externallegal services was for procurement and legal teams towork in tandem. Procurement professionals have theskillset to complement the insider knowledge of thein-house legal team and can provide an objectivityand analysis which is essential to optimising cost.

4C Associates has the insight, technology andexperience to drive rapid profit improvement.We offer specialist consulting, technology andmanaged services to transform your costs. Weapply industry and functional expertise to deliverexceptional benefits.

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"Legal departments want to reduce cost andthere are two ways of doing this, head countor legal fees, we want to focus on the latter."

Summing up the debate, Ray felt the key to effectivelysourcing legal services was for procurement and legalto work together.

Are Law Firms in the UK still Carrying Too ManyFee Earners?The Royal Bank of Scotland’s review of the legalprofession has suggested that further redundanciesmay be required for firms to restore their profits topre-2008 levels. The report suggests that a further 5%of fee earners may need to go, in addition to thoseshed in 2009.

The study indicated that the market faced a range ofchallenges including reduced demand andunfavourable economic conditions. The ramificationsof the Legal Services Act are also beginning to be feltwith new entrants to the legal market providingcompetition to traditional firms.

Recoules agreed that the legal profession was ingeneral fairly protectionist and that the measurementprocess brought about by procurement could proveuseful. However, she felt that a lack of internalknowledge on behalf of procurement professionalsaffected their ability to effectively source externallegal services.

“Procurementcan add robustqualityevaluationmethodology,negotiationskills and anoutside viewwhich willgreatly assistin arriving atan optimaldeal or LegalPanel”