Legal Innovation: Outside In

This past week there was a conference held in the UK that looked at the Future of Legal Services.  While much of the conference certainly focused on innovations and developments coming from law firms there was a growing dialogue around innovation from outside the traditional legal circles.  As I have worked with clients in the UK – both firms and corporations – my envy has grown over their more open competitive landscape as compared to ours in the US.  The UK does not have the “unauthorized practice of law (UPL)” claim/defense/challenge that the US has.  Further, the UK tends not to hold the legal profession as some sort of sacred cow, as the US Bars do. 

In today’s Legalweek, Claire Ruckin (see article here) reports on the statements and sentiments at the conference in regards to innovation, at least within the UK market.  Given the looming changes to UK’s legal markets thanks to the Legal Services Act (LSA), investors will soon be able to invest directly in law firms – something that may not be so appealing to many, at least according to some.  Simon Beswick of Osborne Clark stated it plainly “Venture capitalists see more opportunities in setting up new businesses to compete with law firms, as opposed to direct investment into existing firms (as quoted by Ruckin)."   This goes against both of the widely held assumptions that investors would want direct investment in firms and that innovation can only come from law firms themselves. 

Yesterday I attended the Univeristy Of Maryland School of Law conference “Addressing Major Changes in Law Practice.”  Gillian Hadfield of USC Law often asks the question and raised it yesterday as well “where are the garage guys of legal?”  It is by no coincidence that she uses that term as she is currently at USC – close to the birthplace of so much innovation and where departing from the mainstream to go invent and create in a one’s proverbial garage has led to some amazing products as services – see Apple, Google, Microsoft.  But as Gillian and others have pointed out, here in the US too often any innovation in the US is squelched by UPL claims when they come from outside the law – or even from within it.  It is instructive to review the claims against LegaZoom and TotalAttorneys for evidence of this - - or just talk to anyone who disagrees with the use of off-shore LPOs. 

So while the UK moves forward and loosens the constraints and barriers to entry to their legal market, the US holds fast to arguably antiquated and weak claims of self-regulation and professional protectionism.  For the record I am not against law firms nor am I out to seek their Ribstein-ian death.  Rather I am confident that the US market is in dire need of serious innovation in creating more options for consumers and clients -  the old way can stay, just make room for some new way as well.  Why is this change necessary for the US?  Because every other legal market is either developing or changing as we speak – that is besides Mexico who is looking to replicate ours.  My guess with Mexico though is they will embrace our distinctive advancements (Constitutionality, rights, judicial system) and disregard our ignorance and/or arrogance in not recognizing and not pursuing significant change.  Then again, as I stated yesterday in Baltimore – perhaps the US is truly brilliant and we will lead by NOT changing.  Call me patriotic but that does not seem to reflect the famous American spirit. 

In the meantime though I tend to believe consultant Stephen Mayson (a recent Georgetown Law: Law Firm Revolution panelist) when he argues that the next five years would expose the shortcomings of the profession's business model and capital structure, arguing that law firms "don't understand value."  He was speaking in the UK but his remarks apply here as well – perhaps even more so.