Bringing legal costs back down to Earth

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Jordan Furlong at Law 21 has a great post on decoupling price from cost in legal services.  His argument: law firms have never been motivated to streamline the cost of their production because of a long tradition of simply passing costs on to the client. True enough, for decades that mentality has fueled the relentless rise in the cost of legal services.

But the clients also have themselves to blame too, Furlong implies. Money quote:

“What’s interesting is that most conversations about “reducing costs” are one-dimensional. They focus on the client getting the same kinds of services from the same kinds of law firms at a lower price; or, more concisely, the same-old same-old for less. They don’t envision rethinking the source of the services, or more importantly, the ways in which those services are produced. Ron Friedmann points out that when looking at ways to control costs, in-house counsel tend to focus on pricing elements — rate freezes, flat fees, discounts, alternative fees, and so forth — while ignoring the potential savings of reforming the process by which legal services are provided.”

That said, the cost of legal services is beginning to adapt to new realities:

“Here’s the really important thing that’s happening right now: the price of legal services is finally becoming uncoupled from the costs lawyers incur to produce it. Partly through efforts to identify the underlying value of a service to the client (something unrelated to lawyers’ cost), and partly through the relentless advances of technology and globalization, legal services price has been liberated from lawyers’ costs and is starting to establish its own gravity and orbit.”

In the years ahead, legal services will be delivered from a variety of different source points.  Hopefully we’ll see the overall cost of legal service come back down to Earth as a result.  If so, technology and the automation of legal services delivery will have played a big role.