Saturday, February 18, 2012

Turning Overheads into Profits? What To Do with Spare Lawyers Lying Around...

I'm sure I recall a cartoon that showed a group of lawyers entering a canteen and someone shouting, "Here come the overheads!"

Legal work has always been difficult to situate in the range of useful work. By that I mean do lawyers add value to deals and other matters that people are involved in or are they merely an exasperating cost that has to be borne because of regulation? Plenty of scholars have tried to analyze lawyers' work to overcome that stereotype. For example, see here and here.

Usually the approach is centred around the conventional law firm. Following the introduction of Alternative Business Structures with the Legal Services Act, this restriction has fallen away. This was brought to mind when I read about BT Claims applying for an ABS licence.

BT Claims is a motor claims management service (part of what used to be British Telecom) which handles the claims for BT's fleet of vans. 
A BT spokesperson said: "We can confirm that BT Claims has submitted an application to begin the ABS process in order that it can offer its expertise to other corporates, insurance and companies and brokers who share the same values as them and see this as an opportunity to improve their approach to the way in which they manage claims. BT is not looking to enter the consumer claims market."

BT Claims is a wholly owned BT Group company which currently provides a UK-wide motor claims management service to 35,000 corporate fleet vehicles. It handles around 4,000 at fault accident damage and personal injury claims per year, with a an average liability value in excess of £5m and around 3,000 non-fault loss recovery claims with an annual recovered value of £2.5m.
BT Claims will be a B2B business with no consumer focus. I'm sure this will be the first of a wave of such ABS, ie, B2B rather than B2C. They will be a new form of corporate legal department, only freestanding rather than a component with a firm. And this is the way to challenge the "lawyers as overheads" proposition--turn them into for profit ventures by recreating them as Alternative Business Structures.

There are other examples of where this might occur. Two years ago I commented on Kent County Council's legal department's venture with Geldards to "create a single brand for public sector work capable of taking over local authority legal departments." The new "structure" will be called 'Law:Public'. It doesn't take much to imagine local authorities hiving off their law departments as freestanding ABS. They would embody enormous expertise in the regulatory field, for example.

The print industry has been predicted as a creator of an industry-specific ABS because law firms are woefully, and expensively, ignorant of the business.

Jon Robins' report, The Big Bang Report, published in 2009 previewed some case studies including the Co-op, A4E, and DAS as ABS.

We are finally seeing the emergence of these new legal entities. The curious thing about them so far is that they are not radically new businesses evolving in the liberalized regulatory environment but rather mutations of things that already exist. It's the phenomenon of "hiving off" to re-create.

For example, both DLA Piper and BLP are spinning off outsourcing businesses. DLA Piper is launching a new ABS called LawVest* that will do something magical along the lines of "market-disrupting brand, pricing and service delivery model", whatever that might mean.

BLP is selling off its contract lawyer operation, Lawyers on Demand, but as an ABS we don't know.

What is fair to say is that none of this yet signifies the End of Lawyers(?). As one examines these ventures they all have lawyers at their heart. I know Susskind says he's looking 20 years ahead but frankly that's an illusion. Go back 20 years and then ask yourself would you have predicted the iPhone and the iPad or the rise of social media as a political force? The answer is clearly no.

Yes, legal work will change. Yes, legal education will have to adapt to the 21st century let alone reach the twentieth. But these are adaptive changes that occur in any area. Are we envisioning changes so disruptive that our known world disappears? I don't know and we can't know.

Yet legal work has remained remarkably sticky (thixatropic) in the way it has endured. So it's fair to ask if the central task(s) that lawyers do could be replaced by intelligent software, regardless of convergence. Intelligence as a rational force is amenable to cloning by machine, but often the demand we hear these days is for more emotional intelligence, compassion, perhaps, in the case of access to justice. That is not so replicable.

At least it's fun to observe even if our predictive powers are rudimentary.
* 20 February 2012 Update: LawVest has revealed its new venture which is to become an ABS. It is Riverview Law. Essentially it is a B2B venture for SMEs that need quick legal advice, all at fixed prices. Riverview details its pricing policy here, and will be using technology to keep prices down.

The only thing that's surprising about this is why no one has done it before...


1 comment:

Apu Mridha said...

Thank you for sharing such an amazing and informative post. Really enjoyed reading it. :)


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