Top legal practices face up to ‘do or die’ tech challenge
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North America’s legal market remains a paradox. It is home to some of the best lawyers in the world. Yet many of its law firms, particularly the so-called elite tier, have been slow to adapt to change, either in terms of technology or in their dealings with clients. The convention of the billable hour, for example, has a stronger hold in the US than in any other developed legal market in the world.
Even elite firms are starting to look ever more like King Canute, however, doomed in their attempts to ignore an incoming tide of technological innovation. The number of firms that can say their work is purely “advisory” rather than being open to standardisation or process improvements is small. But with stellar reputations and institutional names, this small group still wins the juiciest mandates in litigation and M&A work for the top clients.
This means, however, that they grow in profitability but not size. For the rest of the market, change is inexorable. Some sizeable and credible well-known firms are embracing it: Orrick, Reed Smith, WilmerHale and Hogan Lovells to name a few.
While they have significant advisory businesses similar to those of the elite US law firms, they recognise that some aspects of their work can be done better by taking a sharper approach to project management, resourcing and technology. Many of these firms have developed their own proprietary technology. These include Reed Smith and its “quick” pricing tool, which allows it to create transparent pricing arrangements so that clients have predictability and can track costs and lawyers can actively manage their budgets.
Hogan Lovells has tacitly recognised the difference between work that falls into the premier advisory category, drawing on senior lawyers’ expertise, and work that involves armies of lawyers, where a significant amount of due diligence is required. It calls the first category of work “fast” and the second “slow”, in an attempt to institutionalise the firm’s approach to handling different types of instructions more appropriately.
The business of law section in this year’s FT report on North America’s innovative lawyers reflects a step change in the legal profession from 2017. There is a greater commitment to thinking differently about clients’ needs, embedding technology into legal processes and heeding the demands of millennials. The influence of the younger generation of lawyers in driving these changes cannot be understated.
Weil, Gotshal & Manges, for example, has shortened its career track to partner by two years in consultation with its mid-level associates. Young lawyers now have more clarity about their career paths. Another firm, Paul Hastings, has co-opted its associate lawyers to boost its technology prowess.
There is also evidence of some elite law firms realising the value of turning elements of their “advisory work” into clearly defined offerings that can be delivered like other products and do not involve human interaction. The law firm Davis Polk has created Cyber Portal, which enables companies to know their disclosure obligations across US states immediately in the event of a breach.
The largest law firm by revenue and in the top quartile by profits, and the latest challenger to the traditional group of elite law firms, is Kirkland & Ellis. With revenues of $3.2bn, it became the world’s biggest by turnover this year. The company, founded in Chicago, has focused on private equity work and is one of the first of the leading firms to make a concerted effort to eschew paper and digitise all of its historical paper files by 2020.
This year, we have split the overall rankings table to show those firms that are forging ahead in the way in which they run their organisations — the business of law — and those that are still predominantly known for premium advisory work — their legal expertise.
In first position in the latter category this year is Cravath, Swaine & Moore. It stood out for its persistence and ability to help define industries. Although it does not appear in the business of law rankings, the firm has hired two legal engineers and is investing in machine learning technologies.
In the business of law section, McGuireWoods, a full-service firm that originated in Virginia, is exploring different advisory roles. It stood out for its work in acting as a connecting agent between independent sponsors and target companies (a rare role for law firms) and for its fresh approach to business development by providing one-day free trial consulting from its top litigators for free.
The best performer overall in the FT report, however, taking into account all of the ranking categories, is Orrick. The firm, which has its headquarters in San Francisco, continues to push forward in combining lawyers, processes and technology. This was most evident in its work for Microsoft in a major class action discrimination case. The software company has said that it wants its external law firms to stop billing by the hour: Orrick’s resourcing approach combined with its use of proprietary CaseStream technology is going a long way to help Microsoft to achieve that goal.
FT Innovative Lawyers North America 2018 is a rankings report and awards for lawyers based in North America. Shortlists for the awards comprise the top-scoring submissions in each ranking.
The FT and its research partner RSG Consulting have devised a unique methodology to rank lawyers on innovation. Law firms, in-house legal teams and other legal service organisations were invited to make submissions.
For the FT Innovative Lawyers Report for North America 2018, we received over 500 submissions and nominations from 94 law firms and legal service providers and for 105 in-house legal teams. Research was conducted by RSG researchers between August and November 2018. We conducted interviews with over 500 clients, senior lawyers, executives and experts to arrive at the final rankings.
Each entry is scored out of 10 points for originality, leadership and impact for a maximum score of 30. They are then benchmarked against each other to arrive at the final rankings.
Most innovative law firms in ‘business of law’ and in ‘legal expertise’
The rankings are an aggregate, respectively, of each law firm’s performance across the business of law and legal expertise categories in the report. The total score for the most innovative law firms in the business of law ranking is the sum of all ranked entries in the six business of law categories of the report. The total score for the most innovative law firms in the legal expertise ranking is the sum of all ranked entries in the five legal expertise categories of the report.
Most innovative North American in-house legal team
This overall ranking is an aggregate of each in-house legal team’s performance in the report. The total score is the sum of scores for all ranked entries in the 10 in-house legal categories of the report.
A panel of judges decides the winner of the Legal Innovator of the Year award, from a shortlist of 10 individuals.
The judges were: Harriet Arnold, editor, FT Innovative Lawyers; Stuart Barr, chief product and strategy officer, HighQ; Leyla Boulton, editor of FT Special Reports and FT executive editor; Liam Brown, founder and executive chairman, Elevate; Madison Darbyshire, FT Special Reports legal communities curator; Yasmin Lambert, partner and senior consultant, RSG Consulting; Lucy Pearson, research director, RSG Consulting; Myriam Schmell, vice-president, global sales, Elevate; Barney Thompson, FT legal correspondent; Ram Vasudevan, chief executive and founder, QuisLex
The FT research partner RSG Consulting has decades of experience analysing the legal profession. It has a track record of devising ranking methodologies for professional services firms. CEO Reena SenGupta helped launch the FT’s Law & Business page in 2001, and has been a regular writer on the legal profession for the FT for 17 years.
RSG research team: Reena SenGupta; Yasmin Lambert; Lucy Pearson; Alexander Muncey; Tom Saunders; Sze-Von Lam; Harry Young; Liam Sweeney; Georgie Lyon
Innovative Lawyers North America Ranking 2018
- Top Innovative Law Firms: six of the best overall
- Most Innovative Law Firms: Business of Law
- Most Innovative Law Firms: Legal Expertise
- Rule of Law | • In-house
- Data, Knowledge and Intelligence | • In-house
- Managing and Developing Talent | • In-house
- New Business and Service Delivery Models | • In-house
- New Products and Services | • In-house
- Strategy and Changing Behaviours | • In-house
- Technology | • In-house
- Accessing New Markets and Capital | • In-house
- Enabling Business Growth and Transformation | • In-house
- Managing Complexity and Scale | • In-house
- Litigation & Disputes | • In-house
- Creating a New Standard | • In-house
- Canada: Legal Expertise
- Canada: Business of Law