Legal Services in the age of globalization

Legal Services in the Age of Globalization

With law firms expanding globally, both opportunities and challenges
arise for the practitioners

Globalization has been a mixed blessing for law firms. The deepening integration of economic activities across countries and continents, driven by technological and intellectual innovation, has had an impact on every sphere of social life and, inevitably, the laws that govern it.

For practitioners, this has been complicated.

As economic growth is spurred by the movement of capital, goods and services across borders, an increasingly complex network of rules, norms and international agreements governing these interactions has resulted.

Some firms have managed to grow by expanding into new markets, as their corporate clients internationalize, and new opportunities arise in the emerging economies of South America, sub-Saharan Africa or India. At the same time, law firms face increasing competition from in-house law departments and global accounting firms, which increasingly take on routine tasks. In new markets, setting up shop is expensive: Rarely can firms charge the same rates as they do at home, and identifying and developing local talent can be a lengthy and costly process.

For this reason, many firms have chosen a network approach, partnering with local firms to meet the demands of international clients. However, insuring consistently high levels of professional services and quality across a network while developing a distinctive profile comes with its own challenges. To stay competitive, some international law firms have resorted to outsourcing, now a central feature of the globalized economy. Back-office functions and routine work are shifted to low-cost locations, often resulting in quality control issues. As to scale, firms tend to go one of two ways: either consolidating into global firms and networks, or developing into highly specialized boutique firms with a strong focus on specific legal areas.


While globalization has already shaken up the business of law, the digital revolution is expected to entail further disruption of an entirely different scale. Legal tech – the application of technological breakthroughs in machine learning, pattern recognition and artificial intelligence – promises to automate large parts of routine legal work such as research, due diligence or reviewing contracts. These promises come with a set of serious caveats, however. Self-learning algorithms, the foundation of many legal tech applications, are an inherently opaque technology; their outputs are not transparent or verifiable. As such, legal tech can be an important tool for decision-making, but responsibility – and liability – will remain with the law firms and practitioners themselves.

Its proponents claim that legal tech will also be able to help predict the outcome of legal pro-ceedings and help decide whether or not to settle by statistically analyzing a large number of decisions in similar cases. Legal tech will allow law firms employing it skilfully to grow and overcome challenges; at the same time, however, it will increase competition even further by opening the field up to newcomers. Already, online e-platforms (backed by venture capital) offer automated solutions for streamlining tasks ranging from challenging traffic tickets to handling divorces, or routine filings for licences and permits. In short, most legal work that is repetitive or simple will be either automated, outsourced or handled hencefort by cheaper non lawyers. What these developments mean for the legal profession is a matter of perspective: If the assumption is that extensively handling routine tasks is essential for the training of young lawyers, legal tech can be seen as a threat to the standards of the trade. Another view, however, holds that as only the most complex, important and creative tasks will remain and fewer lawyers overall are needed, the field will continue and perhaps improve in attracting talent.


Those firms that manage to employ the latest digital technology in a strategic, methodical and unified way can expect to benefit from healthy business growth and improved financials. The vast amount of data that large law firms possess – client records, “form” contracts and clauses – is a valuable resource in the digital age. If mined and evaluated by artificial intelligence applications, it can teach firms how to improve client acquisition and retention, reduce risk and increase profits.

As technology promises to make law firms more efficient, help to save money, and improve client engagement, legal practitioners need to hone their profiles to stay ahead of the competition. Professionals will probably, over time, need to define their roles more broadly and become more client-oriented, offering comprehensive legal, political and strategic advice, and ideally, making for better legal services. To do this, a tightly knit network of decision makers in business, politics and civil society will be a key selling point for successful law firms. In order to stand out from a growing crowd, firms will also need to tell a distinctive story not only about client service and cost efficiency, but also about values, the firm’s culture, and a commitment to societal engagement.

Philipp Freund is a policy adviser at LGP Vienna with a background in international law, political science, and international relations. His emphasis lies mainly on the political consultancy offered by LGP, assisting clients through in-depth analysis of the global and regional political and economic climate as well as drawing up strategic advice

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