Division of Labor and Law Firms

by LeClairRyan

legal_disruptionTwo recent articles/blog posts piqued my interest. The first was written by Pam Woldow of Edge International (link), and the second by Robert Gogel of Integreon (link). Both were insightful, and I would like to both share the insight and add to them. In the interest of full disclosure, my firm, LeClairRyan, maintains a working relationship with Integreon.

Pam Woldow’s article speaks to the use of LPO and LPM as methods of increasing efficiency. Robert Gogel’s provides some historical perspective to the concept of the division of labor, something my readers are very familiar with from previous posts. Both recognize that the new normal will include “new” collaboration.

Historically, the division of labor is nothing new, as pointed out in the Gogel article. Adam Smith, in his venerable Wealth of Nations, described anecdotally how the division of labor concept could be as old as the caveman. The caveman whose dexterity was such that he would make a better bow may have traded such bows for pelts or meat. As his speed in making such bows increased, he would be able to generate more “income” for his family than he could by engaging in the hunt itself.

While the story itself may be apocryphal, it is plainly an example of how simple the concept is. Henry Ford made good use of it by developing the moving assembly line. Move the product, leave the human resources in place, and create experts at specific tasks. I’ve read a lot of articles saying that the legal industry has simply never adopted the concept. This is inaccurate, of course.

Examples of division of labor are common in the legal industry, albeit perhaps less so at the top level. Particularly with repetitive tasks or what I have called portfolio practices (where the type of work is substantially similar and, therefore, easily repeatable), law firms have consistently looked for ways to divide labor appropriately. The difference, as pointed out in Pam Woldow’s article, is that many firms have been loath to perform any true cost analysis or become more efficient, because those costs have always been subject to pass through to the client.

However, the client still reaped a benefit, at least at some levels. As I’ve discussed in the past, my career has taken me through different derivations of firms. I went from a small insurance defense firm (<20 attorneys when I left) to a large, regional firm (400+ attorneys when I left from an office with about 200) to my current firm that is about the same size, but is far more spread out and occupies the business space between the two. I have never been a solo, and I have never worked for an AmLaw top 20. But my experience is that the clients do reap benefits from the division of labor that does exist.

To take a page from Adam Smith, imagine a mid-sized firm that is trying to maximize profit but does not have the ability to increase rates by 7.5% every year or continually hire more associates to support the rear ranks. One of the ways to do it is reduce overhead. Once the offices are properly staffed and organized, and the appropriate space is leased (in kind and size), then what?

The owner of any business will tell you the two largest expenditures are typically real estate and human resources. So the latter is where changes are made. Keep in mind, just like Ms. Woldow, I am not talking about cutting corners. I’m talking about right-sizing, and making sure the right people are doing the right work. If that is done appropriately, the firm continues to profit at an acceptable margin, and the clients of that firm may benefit in two ways. The greater use of paralegals and associates reduces the realized rate for the clients (assuming hourly rates assigned by title). Further, the firm may maintain the same rate structure longer.

legal services disruptionDespite the above protestations, the model is still unsustainable. Legal Process Management is on the verge of being all but required, especially at the higher rate levels. Whether that comes internally or through an LPO is more likely a matter of preference of both lawyer and client.

I suspect that more firms will begin to finalize arrangements like LeClairRyan has with Integreon and UnitedLex (link). Legal departments will continue to feel pressure to reduce costs. However, I sincerely believe that many, if not most, clients will be reluctant to substantially increase their own administrative burden in the search for reduced cost. I have dealt with clients at every point on the scale of demands and requirements of outside counsel: from do nothing without checking with me to let me know when it’s over unless it’s blowing up. (Ever mindful of “bring me good news or bad, but never bring me a surprise.”)

Thus, I suggest that there will be a movement towards maintaining law firms as “one-stop” providers, along with increased demand for reduced costs, increased predictability, and better metrics. Collaboration between outside vendors, whether LPOs or more specific providers, will become more and more ubiquitous, and moving forward, such collaborations will be as common as relationships between firms and court reporting agencies and copy centers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© LeClairRyan | Attorney Advertising

Written by:


LeClairRyan on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.