LPO’s Have Become Legal Project Outplacement Firms: They Are Outplacing Legal Work from Traditional Law Firms

by Jerome Kowalski
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As Jeff Carr the voluble distinguished general counsel at FMC Technologies has long noted, legal services can be into four buckets: counseling, advocacy, process and content. See, for example, http://kowalskiandassociatesblog.com/2011/09/14/the-clock-is-ticking-in-five-years-traditional-law-firms-may-be-extinct-what-are-you-doing-to-avoid-being-an-artifact/ .

Of these four buckets, only a portion of two of them require formal bar admission. In particular, court appearances and trial work (in the advocacy bucket) and formal opinion letters (in the content bucket) require admission to the court in which a case is pending or in a state under whose laws an opinion is rendered.

But in the ligation (advocacy) arena, a very small percentage of the services rendered require the individual provider of legal services to be licensed. The majority of the work performed in the litigation process, consisting of legal and factual research, drafting of pleadings and motions does not require that individual providers of legal services be duly licensed. Licenses are only required of those making court appearances, inclusive of taking or defending depositions. Thus, as we all know, if we were to measure a full “litigation bucket,” it is likely that perhaps 10% of the contributors to that bucket require bar admission.

With regard to content, the bulk of the work consists of due diligence, document review and legal research. The providers of those services need not be licensed. The only component requiring a license is the rendering of a formal opinion. Again, only an immaterial number of the contributors to that bucket require licensure,

Yes, of course, LPO’s are open and notoriously practicing law without adequate bar admissions, licensing and are largely owned by non-lawyers. In that same vein, Internet providers of legal services are similarly openly and notoriously practicing law without being properly licensed and are also similarly owned by non-lawyers. (http://kowalskiandassociatesblog.com/2011/08/11/are-law-firms-going-to-be-replaced-by-internet-based-providers-of-legal-services/ ) Both operate in a completely unregulated environment, and no regulator or other authority has undertaken to challenge these activities.

Paul Lippe estimates that within five years, these alternate providers of legal services will own 10% of the gross legal spend, or approximately $5,000,000,000, with traditional law firms losing $1.50 to $2.00 for every dollar earned by these alternate providers of legal services. http://www.abajournal.com/legalrebels/article/the_rise_of_the_non-firm_firms . These alternate providers may already be “too big to fail” and will be increasingly so as their market share grows.

More significantly, the beneficiaries of this market disaggregation, namely consumers of legal services, will not abide any belated attempts to enforce bar admission or law firm ownership rules. The cow has already left the barn.

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Jerome Kowalski
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