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Berkeley Bridge and Legal Innovation: change or be changed!

Mr. Rob van de Plassche

It has been written many times before, and the title of this article probably makes you think: “Yes, I know. We need to change”. And it cannot be repeated often enough: The legal profession, like many other professional services industries before them, really needs to re-evaluate the way they operate and think about their added value. Or someone else will do it for them!

For as long as the legal profession exists, the business model has been to offer tailor-made advise or support, and receive one-on-one compensation from the client in return. Sure, there are many other business- and billing models, but they all boil down to remuneration linked more or less directly to the service provided. This system in itself doesn’t really stimulate innovation, except for maybe the odd technology initiative to optimise operational efficiency. After all, clients face an ever-increasing number of legal challenges, and the good old business model means that legal professionals still earn a decent living from providing their added value services.

Customers define value

This is all true in essence, except that the clients themselves are increasingly scrutinising this added value provided by the legal profession. One of the reasons for this is oddly enough the same reason that seems to inhibit the need for change in the first place: the ever increasing number of legal challenges. Customers need to tackle that increasing number of challenges, but on a decreasing budget. They simply need to be more selective when to spend money on legal support and when to look for more cost-effective alternatives. And to make the circular logic complete: it is the absence of true business model innovation within the legal profession that creates these alternatives.

Space for new entrants

It is a well-known economic law that (perceived) supply-side inefficiency, or the demand-side need for more efficiency, attracts new market entrants that can do similar things, only cheaper or better. The combination of easy access for clients to legal knowledge through technology, and the fact that some legal activities are rather generic in a sense that the same thing is done at multiple clients, creates a perfect situation for new market entrants and a plethora of options for clients to choose from.

Let’s look at an example where this is already happening: compliance within the Financial Services Industry. Over the past years, Financial Services providers have been faced with an ever-increasing number of new and more rigorous rules and regulations regarding investor- or consumer protection, financial stability and market harmonisation. With the causes and effects of the financial crisis still lingering in our collective minds, this regulatory pressure is expected to only increase in the future. Market conditions that should result in a solid sales pipeline for law firms, if it weren’t for those tighter budgets that create alternatives of:

  • Companies that do things cheaper

The typical compliance engagement in essence consists of four stages, (i) access and interpretation of the latest regulatory requirements, (ii) gap identification and analysis, (iii) chance projects to close the gap and (iv) compliance validation. The nature of these projects, combined with the previously mentioned generalness of legal activities, make these engagements a perfect target for consultancy companies. With a little legal specialisation and a lot of support from the client’s own legal staff, they can do virtually the same job, only at a considerably lower hourly rate. Specific legal expertise is only hired if absolutely necessary. Whilst this lowers the total cost of these compliance engagements, it does not address the inefficiency inherent to the business model of law firms.

  • Companies that provide smart alternatives

Technology has spawned a new generation of companies addressing those inefficiencies. By capturing legal processes or content in a way that it can be reused, these companies have successfully created business models in which the cost of legal knowledge can be shared between multiple clients, as opposed to the one-on-one link between services and remuneration. We have seen this on a smaller scale with tools for document assembly, calculation or advisory tools, but recently some companies have taken this to a whole new level. Companies like Compendor and Ruler. Compendor for example have created interactive Compliance Monitoring solutions that enable clients to do a full scoping and gap analysis on various European directives, provide complete compliance evidencing and automatically create an audit trail and reporting to the regulator. In theory, clients get a complete self-service solution for their compliance projects. Optional access to (online or on-site) legal support, but again only if absolutely necessary, makes this a very efficient and competitive proposition.

Call to action

So in the light of all of this, what should law firms do? The one thing that is not an option is to do nothing. It is a common misconception that these new entrants will only take the parts of the business away that has “relatively low value”. First of all: the customer, not by the supplier, defines value! Second, the chance of getting the “higher value” business becomes much slimmer when you cannot prove yourself with “lower value” work.

What law firms should do instead, is to assess what their added value actually is, and define services that combine this added value with a business model that addresses the previously mentioned market inefficiencies. For example by creating new reusable legal applications like Cadwalader and Linklaters did, or by cooperating with new market entrants to do validation and accreditation of their solutions and provide ancillary legal services.

Reinventing yourself is not an easy task, even more so in a market that adhered to specific business model for as long as the legal profession did. But now is the time to change. And I, for one, would prefer to be in control of that change.

Example of the Case Legal applications; Cadwalder’s 'Find Know Do'

There is a challenge for professionals in the financial industry to keep track of all regulatory related information. If you look at the available information nowadays, it’s hard to keep track (information overload). Cadwalader, Wickersham & Taft LLP understood that they had to make a difference and expand their support to (potential) clients. In cooperation with Berkeley Bridge they developed the Cadwalader Cabinet. The Cadwalader Cabinet discloses daily information on new rulings, news, expert analysis and relevant events.

Together they developed a special section, called Mycroft Systems. It is a comprehensive set of smart tools based on Berkeley Publisher software. Mycroft Systems can be used for:

· Analysis of regulatory questions, using decision trees

· Checklists of work accomplished or reviews performed

· Paths to find particular documents

· The creation of standardized contracts and certificates

· Offering and scoring tests, and

· the creation of a work flow

The smart tools of Mycroft Systems can be used in The Cabinet. Another option is installing Mycroft Systems, with optional tailored smart tolls, behind the server firewall of a financial institute or company. Data from internal systems can be safely uploaded into the Mycroft Systems (visa versa).

Rob van de Plassche,

Partner at Berkeley Bridge

About Berkeley Bridge

Berkeley Bridge supports law firms in translating legal knowledge and processes into interactive software applications. Our technology platform, the Berkeley Publisher, enables domain experts to model their specialist knowledge without the help of programmers, and to publish that knowledge as solutions for customers or colleagues to use.

Contact Information


Phone: +31 (0)172 515146

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