In this post on his Law Department Management blog, Rees Morrision—prolific consultant to law departments—quotes a survey in the July 2008 issue of Inside Counsel as saying “33.5% of in-house counsel reported that law firm services are a commodity.”
Here’s Rees’s take on this:
Loyalty rates of law departments to law firms suggest otherwise, and incessant fee increases by law firms suggest otherwise, and the infrequency of competitive bids suggests otherwise, and the rarity of fixed fees suggests otherwise, and slow adoption of offshoring suggests otherwise, and stymied document assembly suggests otherwise, and soaring profits per partner suggests otherwise, and proliferation of mega-firms suggests otherwise …
But what’s your point, Rees Morrison?
My point is that in-house lawyers respect the quality and individuality of craftsmanship produced by the particular firms they use, and that they do not look at those firms or their services as fungible.
I agree with Rees’s conclusion. It would be silly to claim that all law-firm services are a commodity. Now, if the survey had said “in-house counsel reported that 33.5% of law firm services are a commodity,” that would have made more sense. Some law-firm services are a commodity, some aren’t, and, crucially, some should be.
Consider transactional work: Devising strategy and participating in negotiations most certainly isn’t commodity work. Preparing a contract that embodies the deal terms isn’t a commodity task either, because usually it requires that someone revise a precedent contract of questionable quality and relevance—an annoying process with plenty of potential for screwups.
But contract drafting should be a commodity. Any given transaction likely resembles countless others like it, so why should drafters forever be reinventing the wheel?
This brings me to the assertion in Rees’s post that caught my eye—that among other factors, “stymied document assembly” suggests that law-firm services aren’t a commodity.
Document assembly doesn’t permit you to commoditize the full range of law-firm services in a given transaction. Instead, it allows you to turn drafting into a commodity task, leaving the law firm to focus on more value-added work. Document assembly has indeed been stymied, but not because it attempts to commoditize too much.
Instead, document assembly hasn’t caught on because for it to work, you need to marry optimal technology and optimal language. So far, no one has managed that. The focus has been on the technology, which until recently has fallen short. Now we have sophisticated and intuitive software such as DealBuilder and QShift, so the focus has shifted to contract language.
The language of mainstream contract drafting remains a chaotic mess. Automating contracts brings you face to face with that mess—creating optimal contract language isn’t susceptible to a technology solution. And deal lawyers may be good at getting the deal done, but they’re not necessarily equipped to wrangle contract language. I suspect that’s why companies and law firms that otherwise would be good candidates for document assembly have yet to take the plunge.