Wednesday, September 15, 2010

Corporate-Minded Law

September's ABA Journal has a feature story on the growing momentum of private equity legal-service companies taking market share away from the traditional law school model.

According to the article, "Backed by institutions, private investors and hedge funds, these entrepreneurs and financiers employ a growing legion of lawyers in the United States and offshore."

"Even though their enterprises don't counsel clients—they are prohibited from doing so by the ABA Model Rules of Professional Conduct—they are changing expectations about how legal services are priced and delivered."

The common denominator for these legal service companies' business models is the unbundling of traditional legal disciplines and then providing specific efficiencies.

  • Some drive down costs by automating routine legal tasks.
  • Others assemble dedicated teams of lawyers for in-house legal departments to draft simple contracts, review documents and conduct research.
  • Still others use proprietary models to predict probable outcomes in complex commercial litigation, then contract to finance the most promising cases, freeing up corporate litigants' capital for other uses.

This emerging hybrid of lawyer-entrepreneurs "speak a language investors understand. Rather than profits per partner, they talk about market share and return on invested capital. They converse as easily about finance, technology and management as finer points of law. And their enterprises produce steady returns even when unemployment soars and stock markets tank."

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