Canada: New Business World, New Legal Models

As business innovation and collaboration become paramount to competitive success, it is clearer than ever that organizations are not solving legal, financial or even technology challenges, but are instead solving business challenges.

By their very nature and training, lawyers are well-suited for this brave new world: issue spotters and complex problem solvers intimately familiar with the operating system of business. Make no mistake, financial systems may underpin business, but the rule of law is the system on which it operates. With that in mind, lawyers will only become more central to business operations in the future.

Legal services, regardless of the delivery method, need to be highly interconnected and aligned with the goals of the business. Organizations today do not operate in self-contained silos where business units across disciplines do not communicate. Businesses can no longer tease apart the interwoven issues such as law, cybersecurity, public relations, human resources, privacy, regulatory compliance and productivity. Thriving in this technology-driven global economy requires collaboration — with vendors, customers and sometimes competitors.

The next few years will see a rapid evolution of legal services. Tomorrow's legal services require the cross-industry perspective and practice specializations of a top tier law firm, the creativity and nimbleness of a start-up and the practicality and business integration of in-house counsel. This paper discusses the evolving relationship between business executives, in-house counsel and their service providers. It forecasts a new business model for legal services that seeks to increase collaboration, interconnectedness and responsiveness.

The evolving business landscape

The onward march to greater globalization — accelerated by, among other things, the Internet and e-commerce — means nearly every company now has international play or potential. They must now contend with increasingly stringent regulations, across multiple domains and nations, only adding to the complexity of their journey. According to Compliance & Risks, there were about 2,000 regulations globally in 2003 which has ballooned to 16,000 in 2018[1]. Compliance with the specific rules and filings of each country, keeping up with new and revised regulations and shifts in regulatory interpretation is costly and difficult to manage.

The stakes of non-compliance with regulation are greater than ever, including reputational impact, class action lawsuits, administrative penalties and fines. For example, organizations can be fined up to 4% of annual global turnover for breaching the EU General Data Protection Regulation (GDPR) or €20 Million. Under Canada's anti-spam law commonly known as 'CASL', $10 Million penalties are available, even for first time violators of this complex law.

At the same time, digital transformation has made data governance, compliance, contract and litigation management even more important. More data was created in the past two years than in the entire previous history of the human race. Data is growing faster than ever before and by the year 2020, about 1.7 megabytes of new information will be created every second for every human being on the planet. Also by 2020 there will be over 50 billion smart connected devices in the world, all developed to collect, analyze and share data. The sheer volumes of data generated from transactions across now countless touch points are resulting in an exponential increase in the number of contractual arrangements businesses need to draft, comply with and manage. Information discovery, once laborious, is now impossible for mere humans. Digitization creates tremendous opportunities to collect, analyze and monetize data using artificial intelligence but also tremendous risk if not implemented thoughtfully.

Innovation in technology has given rise to a hyper-competitive global market with constantly evolving transformational products and services. Businesses striving to compete in this environment often find themselves in unknown territory, legal and otherwise.

Not surprisingly, according to annual surveys conducted over the past couple of years, Canadian inhouse counsel consistently cite managing regulatory compliance as their most pressing substantive business law challenge. Managing privacy and data security, as well as technology issues consistently rank among their top five substantive business law priorities[2].

The legal industry in flux

In response to the larger business landscape, the legal industry has transformed in the past decade, especially in the relationship between in-house and outside counsel.

The modern business environment has spawned a continuous quest for practicality, efficiency and cost-reduction. In a bid by organizations to move legal capabilities closer to the core operations of businesses and increase cost effectiveness, the legal service industry has seen two significant events occur: the sharp-and-steady rise of in-house legal departments; and increased use of alternative fee arrangements, competitive bidding processes and law firm panels to reduce external legal spend.

The shift to in-house counsel has been remarkable. The number of in-house lawyers tripled between 1997 and 2017[4], and grew sharply following the financial crisis of 2008. This insourcing changed not only the role of lawyers, but also brought the potential to change the very way legal services are delivered. As in-house legal departments evolved, in addition to being closer to the business, a significant focus became one of managing legal spend more closely, as a means to ensure greater value for the services delivered.

With external legal budgets becoming tighter, organizations have also begun to look to Alternative Legal Service Providers (ALSPs) to outsource legal work. Today, 19 percent of legal departments outsource to ALSPs to drive efficiency, but among the large departments this number climbs to 38 percent[5]. But the focus for many remained primarily about outsourcing to lower cost resources as opposed to real transformation of how legal services are delivered. Meanwhile, legal services have, as an industry, begun to reach the limits of both the traditional outsourcing model and RFPs to add value in the face of increasing complexity in a cost-constrained world.

In recent years, in-house legal departments have scaled significantly—some having reached the size of large law firms. With cost savings from external law firms more in hand, the opportunity to achieve cost-efficiencies by improving legal operations has been identified as another effective means to manage within restrained legal budgets. Although they value strategic and specialized legal advice, in-house departments rightfully no longer wish to pay substantial hourly rates for an ever-increasing volume of routine and repetitive work. They instead wish to focus their limited internal resources on more strategic endeavours. Consequently, finding ways to streamline, eliminate, systematize and/or automate routine legal work is of paramount importance. In surveys conducted in 2017 and 2018, it was found that the majority of Canadian General Counsel do not anticipate that their legal department will grow in the next year[6]. This resourcing restraint, combined with the increasing complexity of business issues, is a strong motivator for service delivery innovation. According to this same set of surveys, General Counsel identified knowledge management, talent management and technology adoption as significant areas of opportunity to gain efficiency and improve operations[7].

In this new era, greater collaboration and problem-solving in partnership between in-house and external counsel has tremendous potential to improve efficiency, increase quality and unlock value. This partnership requires harnessing the core business knowledge and practicality of in-house counsel augmented with complementary skill sets and scale offered by law firms. Together, lawyers are an effective force for informing optimal business decision-making, solving tricky business challenges and improving the bottom line despite increasing business complexity.

As businesses embrace digital transformation, the resulting global reach, as well as regulatory and legal complexities, demand sophisticated advisors with experience in both law and many other disciplines. In recent surveys, Canadian General Counsel indicated that enhancing the operation of the legal department as a strategic business function is one of their highest in-house legal department priorities[8]. Other studies confirm that in-house counsel recognize the need for law firms to play a central role in elevating the business value of legal services. Even as organizations seek to reduce legal expenditures, a 2017 survey of more than 200 in-house lawyers — the majority General Counsel or heads of legal — found they valued responsiveness, an understanding of the business and its industry, and deep specialist expertise as the most important factors in choosing an outside law firm[9]. In short: collaborative problem-solvers.

The survey revealed that use of technology has moved well up the agenda. Innovative service delivery through technology was a more important factor when choosing a law firm than personal relationships, corporate social responsibility, or the size and reach of international networks.

According to the legal market research firm Acritas, a staggering 69% of US corporate legal departments believe they haven't seen any of their law firms or legal service providers innovate in the last 12 months[11]. Consequently, clients are increasingly turning to alternative service providers to find the flexible resourcing, efficient processes and technology solutions they need. In order to continue to stay relevant to clients, law firms must accelerate their transformational efforts. This will not only benefit law firms and the businesses they serve, but provides exciting opportunities for the next generation of lawyers. Experience is no longer primarily gained through the "brawn" of late hours scouring through documents, but increasingly, and at an earlier career stage, through the "brainy" work of solving client problems. The advanced technology needed to perform tasks such as e-discovery shouldered by the automation of manual processes, and the abundance of productivity-enhancing applications, means that lawyers have the opportunity to adopt a more holistic and informed approach rather than be mired in paperwork.

Throughout these changes one constant remains true: the quest for greater value. New legal service delivery models are needed that provide streamlined approaches and data analytics to enable lawyers to provide increasingly cost-effective, sophisticated and strategic support to business.

Startup agility meets the traditional firm

Achieving value across the legal sphere demands new business models and an evolving ecosystem focused on collaboration — between not only in-house departments and law firms but also ALSPs, technology companies and other service providers.

To answer the needs of clients in the rapidly changing and interconnected business sphere, McCarthy Tétrault re-thought and re-imagined some of its service offerings and launched MT❯Divisions. This prescient hybrid model combines the firm's more than 150 years of excellence in delivering legal services with innovative delivery methods. MT❯Divisions collaborates with business and technology consultants to provide integrated solutions for clients.

This new endeavour seeks to achieve the best of two worlds: the entrepreneurial spirit, agile operations and light footprint of a start-up; and the focus on quality and calibre of one of Canada's largest, globally active and most storeyed law firms.

MT❯Divisions

MT❯Divisions represents a group of new businesses that have been either acquired or developed by McCarthy Tétrault. Each business operates as a separate subdivision and leverages business, data, technology and other consultants to provide solutions for clients. Current MT❯Divisions business lines include MT❯3, MT❯Align, MT❯Play and MT❯iplus, supported by a lean operating platform, MT❯Core.
MT❯Core is the lean, scalable operating platform for MT❯Divisions. It is founded on a cloudenabled environment, supporting the HR, financial and operational needs of each new MT venture. MT❯Core's sophisticated technology and nimble team of specialists ensures that MT business lines roll out and scale quickly with reduced overhead and without duplicate processes. This platform for business innovation also affords the latitude to test new technology in an agile environment before launching to the broader firm.
MT❯3 (formerly Wortzmans) is the leading law firm specialized in providing advice and services related to the management of digital information. MT❯3 illustrates the need for a multidisciplinary approach to service delivery, bringing together litigators, technical analysts and project managers with extensive trial experience, knowledge of electronic evidence and e-Discovery capabilities. Using advanced machine learning technology, MT❯3 finds the virtual needle in a multi-terabyte haystack, cost-effectively. Retaining a highly-specialized multidisciplinary team, MT❯3 extends service well beyond traditional legal advice and offers a wide range of legal, strategic and technical services within e-Discovery, information governance and technology strategy.
MT❯Align (formerly MT❯OnDemand) is a growing community of high-calibre independent contract lawyers supported by the McCarthy Tétrault platform. MT❯Align quickly provides customized, flexible resources with both law firm and in-house experience to fit clients' unique needs. MT❯Align creatively collaborates with clients connecting them with lawyers with the right mix of practicality, skills and experience, as well as innovative technology, tools and processes. Whether clients: (i) require overflow, temporary or embedded legal resources, (ii) need any level of help with projects, or (iii) wish to streamline routine high volume legal work, MT❯Align offers the optimal legal support for their specific need.
MT❯Play is a global gaming consultancy offering expertise on the business issues facing both the traditional and digital aspects of the gaming industry. This group advises across several areas: eSports, fantasy sports, gaming, i-gaming, lottery and sports betting. Representing yet another innovative model of service delivery, this venture, 50 percent owned by McCarthy Tétrault, provides the technical and strategic business counsel for this emerging industry, fortified with the firm's legal services.
MT❯iplus is a re-envisioning of McCarthy Tétrault's national immigration practice. The MT❯iplus team of counsel, paralegals and paraprofessionals take a holistic approach to the practical personal and business realities of resettling foreign talent. This wholly-owned McCarthy Tétrault division leverages cloud-based productivity applications and advanced document management and immigration tools to help clients efficiently address the processing and management of extensive immigration paperwork.

Each MT❯Divisions business line, wholly supported by the state-of-the-art operations and technology platform MT❯Core, employs tailored approaches to client service delivery under a unified mandate of providing quality and value.

MT❯Divisions is committed to building successful partnerships with clients, including:

  • Deeply understanding the business needs, opportunities and challenges of the industries served to provide customized solutions;
  • Completing projects more quickly to save time, meet deadlines and increase speed-to-deal;
  • Streamlining, eliminating, systematizing and/or automating routine legal work; and,
  • Improving the overall quality, consistency and cost-predictability of legal services.

These businesses all contribute to the bottom line of the firm and its clients. MT❯3 grew substantially after it merged with McCarthy Tétrault because clients saw the benefit of having their litigation, e-discovery and data management needs handled all under one roof. MT❯3 has also continued to provide e-discovery services to other law firms, with appropriate confidentiality screens in place, because of its reputation for a commitment to excellence. MT❯Align, originally conceived of as primarily a placement agency to fulfill clients' secondment needs, has expanded into client solutions such as large scale contract management projects using artificial intelligence. MT❯Play and MT❯iplus are more recent introductions to the market, yet already are receiving substantial interest from clients due to their uniquely integrated services.

Achieving the triple-win: a bullish future for legal services

Businesses are increasingly seeking out service providers who partner with them to provide salient and precise expertise that bridges the disappearing lines between legal, strategic and technical counsel. Cutting-edge legal service organizations that see the future and opportunities imposed by this brave new world will be the allies businesses need to achieve their goals and embrace rapidly changing realities.

Those who can cost-effectively and flexibly deliver value will achieve a triple-win for clients, the firm and its lawyers and other legal service providers. Clients will leverage a closer relationship with their service providers, finding an integrated one-stop shop that delivers sophisticated expertise and an in-depth understanding of their business. Flexible fee structures enabled by alternative service delivery models deliver greater alignment in pricing and ensure value.

Law firms similarly gain a more intimate understanding of client needs. They also have the opportunity for their lawyers to collaborate more deeply with other service providers and in-house counsel to develop effective, practical knowledge and solutions in the areas most relevant to business.

This is a historically unique time for lawyers. The opportunities to take on more meaningful work – acting as the legal brains – while innovation and automation handle with precision the minutiae, abound. Multi-disciplinary teams provide skills development and cross-organizational learning, while new resourcing models deliver a third way for legal careers to unfold. The burgeoning career path ahead combines the learning opportunities of traditional law firm work with the nimbleness of a start up and the business integration of in-house counsel. Lawyers' talent for issue spotting and complex problem solving will be enhanced by both data analytics and greater multi-disciplinary collaboration. This transformation of the legal industry will solidify the central role of lawyers in protecting and supporting the rule of law as the operating system of business. The resulting new business models will to enable ongoing prosperity and success in a rapidly changing business world.

Footnotes

  1. "Global Growth of Regulations by Region" (last visited 5 March 2019), online: Compliance & Risks https://www.complianceandrisks.com/global-growth-regulations-region/
  2. McCarthy Tétrault, "GC Effectiveness" Surveys, 2017 and 2018
  3. Bill Henderson, "How Much Are Corporations In-Sourcing Legal Services?" (2 May 2017), online: Legal Evolution https://www.legalevolution.org/2017/05/003-inhouse-lawyers/
  4. Ibid
  5. Casey Flaherty and Jae Um, "ALSPs: Already Here & Looking Upmarket" (20 September 2018), online: Law.com https://www.law.com/2018/09/20/alsps-already-here-looking-upmarket/
  6. McCarthy Tétrault, "CoLab (TM) Design Thinking" Surveys, 2017 and 2018
  7. Ibid
  8. Ibid
  9. "Standing out from the crowd: What businesses value most from their law firms" (last visited 5 March 2019), online (pdf): Thomson Reuters https://legalsolutions.thomsonreuters.co.uk/content/dam/openweb/documents/pdf/uki-legal-solutions/report/
    thomson-reuters-standing-out-fromt-the-crowd-legal-differentiation-report.pdf
  10. Ibid
  11. "69% of all law firms and legal services fails to offer innovation, their clients tell Acritas" (15 March 2018), online: Acritas https://www.acritas.com/news/69-all-law-firms-and-legal-services-suppliers-fail-offerinnovation-their-clients-tell-acritas

Get our PDF printable version by clicking "Download" below

Download

To view original article, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions