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Why COVID-19 May Lead to Consolidation and Alternative Fee Arrangements

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In Episode 1 of The Advisory Board, Jake Heller was joined by legal industry experts to talk about the legal economy after COVID-19 and the future of legal services. In the course of their discussion, they addressed the likelihood of the consolidation of legal work after COVID-19, and how that may also lead to an increase in alternative fee arrangements. 

Trevor Uffleman, the GC of an insurance company, initially raised the likelihood of consolidation of legal work as a likely catalyst for legal industry transformation. He explained that his team is currently looking at ways to consolidate legal work as part of cutting costs to deal with the COVID-19 economic climate. “We are on the ground right now working to identify, using various methods, the law firms that we get the best value from, from a variety of different perspectives. What we’re actually doing is consolidating work into firms,” Trevor explains. “Where we might have done business with 15 or 20 firms three years ago, we’re finding which ones really meet our needs competitively.”

A key reason for consolidation is to make litigation work — and spend — more predictable. As Trevor explains, he’ll sometimes have the same task handled in two different matters by two different law firms who take vastly different amounts of time to get the work done. For instance, a motion for summary judgment may take one lawyer 40 hours to draft and another lawyer 20. For Trevor, “I’ve got apples and apples, two tasks that are basically the same, and two different law firms are taking vastly different amounts of time to do it, and then I have to go have an uncomfortable conversation about bills.”

As Nicole Auerbach, co-founder of new law firm ElevateNext, explains, consolidation also provides opportunities to build in efficiency and develop processes that are consistent across cases, for litigation as well as corporate legal services. “The opportunity to really look holistically is greater when there are less firms with less differences involved,” Nicole says. By working with fewer outside law firms, it becomes easier to set repeatable processes, identify areas of waste, demonstrate trends, and introduce legal tech across cases. 

Alternative fee arrangements, which can go a long way in establishing predictability, are also enabled through consolidation of legal work by giving clients like Trevor more bargaining power. “Consolidating work gives us an opportunity to discuss that in a more real way than if you’re sending cases to firms on a one-off basis,” Trevor says. 

In general, Trevor expects that the ability for clients like him to push their outside counsel toward using alternative fee arrangements will be bolstered by the economic effects of COVID-19. Trevor offers a perspective on the legal market: “With the heat of the COVID economic crisis, it is really for legal services, I think, a buyer’s market. We have a lot of choices and a ton of competition in the legal services business, so there’s going to be a lot of pressure for alternative fee arrangements.” 

For more on the impacts of COVID-19 on the legal economy, watch Episode 1 of The Advisory Board, or read our recap on the Casetext blog. Join us for Episode 2 for a discussion of how COVID-19 is impacting investments in legal tech, from venture capital as well as law firms.

Join us for Episode 2 for a discussion of how COVID-19 is impacting investments in legal tech, from venture capital as well as law firms. You can also set up a reminder below to get updates on The Advisory Board’s new episodes.