It’s Time For A Digital Legal Marketplace – Forbes
Many years ago at a Finley Kumble partnership meeting a friend wryly commented, âWeâre tents in the bazaar.â He was right; each partner operated his/her own mini-firm– setting rates, hustling business, and engaging in non-stop origination disputes. It was by no means a collegial bazaar. Decades later, the Finley Kumble version of âpartnershipââonce anathema to white shoe firmsâpredominates. But in addition to the âbazaarâ that most large law firms are, a broader competitive marketplace exists. Law firms once dominated the legal vertical, and there was plenty of work to go around. Those days are over. In-house legal departments and legal service providers now combine for nearly half of total legal spend. The âtents in the bazaarâ remain, but a new digital marketplace is also emerging. It is changing the way legal services are bought and sold.
GEâs âPreferred Counselâ Digital Marketplace
General Electricâs recently launched an internal website for its approximately 800 strong in-house legal team. The site, called âGE Select Counselâ enables users to search the roster of more than 200 law firms that are GE âpreferred providers.â Each firm posts its profile which GE counsel can access for reviews, rates, discounts, diversity data, and a range of other information relevant to retention decisions. This is GEâs version of âYelp meets LinkedIn,â part of the companyâs broader initiative to become digital to achieve a shared services model. Welcome to the new legal marketplace where legal providers vie for work in a digitized marketplace and where buyers can comparative shop as never before.
There are several takeaways from the GE site. First is its prerequisite that to become a âpreferred providerââand to maintain a profile– a firm must agree to play by GEâs rules. That includes signing an agreement to provide negotiated rates. Next, the site enables GE counsel to make more informed buying decisions; they can access and compare firm expertise, experience in similar matters, price, peer reviews, and other criteria. This signals the end for the âwater cooler recommendation.â Most significantly, the GE âmarketplaceâ underscores the fundamental shift in the way legal services are boughtâand sold. To borrow from Facebook, clients were once âin a relationshipâ with particular lawyers and firms. Now, âitâs complicated.â In a digitized world, buying decisions are less relationship and more procurement driven. This Tinder-type transactional dynamic between seller and buyer is a reminder that legal services are generally perceived by buyers to be more fungible than bespoke. And now buyers can make more informed, less subjective, and more cost-effective buying decisions. And sellers that are truly differentiated benefit, too.
Whatâs Next For Legal Services?