The value chain can be roughly analogized to a production process. At the onset, the process requires “raw materials” – e.g., cases, statutes and documents – specific to the underlying analysis. Once obtained through inbound logistics, the raw information must be reviewed and organized. In the third step, the value chain transitions towards analysis through a combination of legal research and corresponding incorporation of matter-specific information. Subsequently, the attorney is in a position to prepare work product and provide the client with legal advice. Finally, the value chain ends with execution and implementation, which may take the form of in-court representation, counterparty negotiation or other form of advocacy.
Though “legal services have traditionally been regarded as relatively ‘bundled’” – e.g., closely-linked tasks requiring advanced legal judgement at each stage – legal technology already covers a material portion of the legal services value chain. Inbound logistics, for instance, are largely facilitated through research platforms such as LexisNexis and Westlaw for public information and Intralinks for counterparty due diligence. Further, third-party providers are increasingly moving up the value chain into information processing as well as analysis. For example, in the bankruptcy and finance space, services like ReorgResearch and Debtwire are increasingly-ubiquitous and highly-regarded for processing and summarizing developments pertaining to individual cases as well as the broader jurisprudence.
Experience from other industries suggests that as legal technology matures and evolves, it can be expected to continue moving up the value chain, in the process commoditizing activities once considered integral parts of legal representation and key profit drivers for law firms. As a corollary, evolution in legal technology may incentivize disaggregation of the legal services value chain.
The diagram below shows the legal services value chain along the key dimensions of value creation and complexity. Importantly, value creation along the value chain – represented by bubble size – is neither uniform nor necessarily a linear function of complexity; steps towards the end may create disproportionately greater value than those at the beginning. For example, while effective organization and legal research are important inputs, a successful negotiation or in-court victory creates far more value – and can be accomplished by far fewer service providers. At the same time, steps that generate less value are also more susceptible to disruption through technological innovation, the frontier for which is denoted by the dotted red curve.