Technology and the Melting of Outside Legal Services: Has the Time Come? (Part 1)

legal services

Services procurement category managers know that outside legal services is a significant and complex category of spend, and they have worked hard over the years to reduce it. According to one New York Times article, in 2013 “business spending on outside legal services was $168.7 billion, $6.4 billion lower than at its peak in 2008 of $175.1 billion.” From 2004 to 2013, spend in inflation-adjusted dollars fell 25.8%. At the same time, about 50% of that spend remained consolidated among the top 200 law firms.  

So there has been at least a lid on outside legal services costs, partly due to procurement’s supplier management efforts, but according to a 2014 Wall Street Journal report also because corporate legal departments are bringing more activity back in-house.  

So are procurement’s efforts to continue to push down outside legal services costs petering out? Or are there options ahead? And could they be dependent on technology?  

Yes, you heard me right — technology.

Not unlike many people, perhaps, I find it challenging to hold the ideas of technology and legal services simultaneously in my head. In fact, the ideas are always replaced by the image and recollection of Saturday Night Live’s “Unfrozen Caveman Lawyer” clutching his analog cellular brick phone (ca. 1990), then turning to the hapless ladies and gentlemen of the jury to say, “I'm just a Caveman. I fell in some ice and later got thawed out by your scientists. Your world frightens and confuses me. Sometimes the honking horns of your traffic make me want to get out of my BMW and run off into the hills or whatever. Sometimes when I get a message on my fax machine, did little demons get inside and type it? I don't know. My primitive mind can't grasp these concepts.”

All joking aside, there are as we know popular perceptions of the legal field, and one of them is that technology has not managed to heat up this conservative industry and its frozen-solid cost structures. But is that how things really are?

Well, there is LexisNexis and Westlaw — the Ticketrons of information services platforms in the legal space. And then, oh yes, there are BlackBerrys, voice recorders and yellow note pads (legal size, of course).

OK, I rest my case.

But perhaps that is not the whole story. While technology adoption inside of law firms may be less than advanced, perhaps technology is heating up on the outside, and we are starting to see a thaw. If this is the case, might there be new ways for category managers to slice and dice legal spend and services supply to find new savings in parts of the legal services supply chain that are being unbundled and rationalized by technology?

In the next part of this series, we will explore the basis for this assertion by reviewing new technology-based platforms and services that seem to be having this effect.

In the meantime, if you care to let out your repressed hostility for a particular category of professionals through the catharsis of humor and laughter, return to prehistoric SNL times and enjoy the video.

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