Now here comes 2012, and from where I’m standing, it looks like a year in which the limits of perseverance will be reached and breached. There are just too many places within the traditional legal community where resistance to change will weaken and ultimately collapse. I want to point out three in particular that strike me as especially noteworthy harbingers of some new realities.

Disappearing law firms: Mergers and acquisitions of law firms picked up pace in 2011, but here in December came word of some interesting variations on the theme. Bryan Cave “merged” with Denver-based Holme Roberts & Owen, while Arnold & Porter “merged” with San Francisco’s Howard Rice. I put “merged” in quotes because it’s a polite fiction to pretend that these were anything other than flat-out acquisitions of law firms that were experiencing serious pain. Holme Roberts suffered a string of partner defections and staff layoffs earlier this year, while Howard Rice had lost nearly half its complement of lawyers in the last nine years, including two senior partners in 2009.

You can expect to see a lot more of these kinds of deals in 2012, because a lot of firms are having a very tough time adjusting to the new rules of the market. Some firms, as I noted in a post last month, don’t even make it to the acquisition stage: they simply disappear. This AmLaw Daily article makes it even clearer that dissolutions of law firms took place throughout 2011, starting with Howrey LLP and continuing with smaller and midsize firms throughout the year. You can call it “consolidation” if you like, but it also bears a strong resemblance to a profession-wide culling of the herd. Many law firms are weaker than they appear from the outside, or even from the inside, depending on how transparent their internal financial disclosures turn out to be. Some bigger dominoes could start falling early in 2012.

The rise of Asia: It remains something of a puzzle to me that the merger of China’s King & Wood and Australia’s Mallesons hasn’t set alarm bells ringing across the global legal marketplace. Now the largest law firm based in the Asia-Pacific region, with more than 1,800 lawyers, King & Wood Mallesons is something we’ve never seen before. Put it this way: Mallesons was one of Australia’s biggest and most esteemed law firms, large enough to entertain lengthy merger talks with Clifford Chance and innovative enough to be the only two-time winner of the College of Law Practice Management’s InnovAction Awards. Yet which firm wound up with top billing? That should tell you something about how much influence Chinese law firms are set to wield.

Will King & Wood Mallesons be able to crack the rich Anglo-American legal market? I’m not sure that’s on their radar right now. There’s more than enough work in Asia and Oceania to keep them busy, and frankly, it would be understandable if they think that their corner of the world has more medium-term upside than the western corner. But other Chinese firms are quite happy to go west: in fact, the two biggest law firms in China, Dacheng and Yingke, are preparing to open bases in London. Then there’s small Chinese firm Broad & Bright, in merger discussions of its own with none other than Clifford Chance. Years from now, we’ll look back on 2011 as the year China began breaking into the global legal market.

Alternative Business Structures: And heeeere we go. Starting the first week of January, the UK’s Solicitors Regulation Authority will officially throw open the doors to applicants of all stripes that want to become Alternative Business Structures under the long-anticipated provisions of the Legal Services Act. Regular readers will know that the SRA expects at least a dozen applicants straight away, and that the initial group will include law firms, claims management companies, major retailers, accounting firms, loss adjusters,  private equity houses, legal expense insurers, banks, will-writing companies, and even, remarkably enough, in-house law departments. I don’t know about you, but that looks like a revolution to me.

It’s a revolution that won’t stop at the English Channel or the North Sea, either. There are too many UK companies and law firms with offices worldwide to believe that the contagion can be contained. We’ve already seen the influence of the Legal Services Act in the ABA’s planned endorsement of limited, lawyer-controlled multi-disciplinary partnerships (although the degree of innovation here is comparatively tiny) and the lawsuit launched by Jacoby & Meyers to the restrictions against non-lawyer ownership of firms. Whether these initiatives succeed is almost beside the point: even the specter of massive change in the UK is enough to drive limited reform efforts. What kind of response will the real thing generate?

Those are three reasons to think that 2012 will be the year that the pressure relentlessly building on the fault lines of the traditional legal marketplace will finally produce the quakes we’ve been expecting for a while. And here’s one more: macro-economic and geopolitical events will play a role in the legal market as well. Europe’s financial situation is unsustainable, and the odds of something truly ugly taking place there and spreading worldwide seem to increase every month. The 2008 Lehman Brothers collapse and the resulting western financial crisis was the first shock to hit the legal system and generated a tidal wave of change. The next one could be bigger.

If you like living dangerously, then by all means, plan for 2012 to be another year of raising rates, de-equitizing partners, downsizing staff and taking whatever other measures you feel will continue to prop up the artificial and increasingly archaic metric of profits per partner. Keep on doing what you’ve been doing lately, just more of it. You might yet manage quite well, if your financial position entering the year was rock solid,  your firm culture intensely positive and your relationships with clients extremely sound. But if you feel like your foundation is a little shaky, your strategic direction has meandered, or your morale is brittle, then I think you’d be well advised to pay close attention to what comes next. We were warned.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.

A new legal services company, GlobalLaw Inc., has risen suddenly and dramatically. Based in London, it has taken advantage of the non-lawyer equity provisions of the Legal Services Act to collect massive amounts of capital from investment banks. With this money, GlobalLaw has bought law firms and hired lawyers worldwide, created a huge and sophisticated online service infrastructure, and marketed itself aggressively in multiple jurisdictions. GlobalLaw has now announced plans to buy mid-sized firms in Vancouver, Calgary, Toronto and Montreal simultaneously, and to re-brand and operate them all as GlobalLaw offices. What do you do?

That scenario stopped being hypothetical yesterday, with the bombshell announcement by UK-based global law firm Norton Rose that it was merging with South Africa’s Deneys Reitz and Canada’s Ogilvy Renault. You can read the details in any number of places, including The American Lawyer, LegalWeek, the WSJ Law Blog, the Financial Post, and The Globe & Mail — a range of international coverage that underlines the fact that this, as Joe Biden might say, is a big freakin’ deal.

Norton Rose started the day with close to 2,000 lawyers in 31 cities on three continents, whereas Deneys and Ogilvy together total about 600 attorneys in eight cities, so this looks more like strategic acquisitions as part of a global expansion than a merger of near-equals. I can’t speak to the South African side of this deal, and I’m not even that interested in the logic of the moves from the firms’ respective strategic perspectives (though it sure looks sound to me). What I’m most interested in today is the impact of this development on Canada’s legal marketplace, which I think will be extraordinary.

Some context is necessary, especially if you’re not from around these parts: nothing like this has happened in the Canadian legal marketplace before. Baker & McKenzie was the first “global” firm to come to Canada, but its Toronto office opened in 1962, virtually the Mesozoic Era in law firm history. In 1999, Tory Tory DesLauriers & Binnington consummated Canada’s first (and to date only) cross-border merger with New York’s Haythe & Curley, a union that took something of a star-crossed turn for both firms. In 2008, pulses quickened briefly on a report, immediately denied by all parties, that DLA Piper was in talks with national giant Fasken Martineau DuMoulin. And that’s pretty much the entire notable history of foreign forays into the Canadian legal market, until yesterday.

So you can understand why much of Canada’s legal profession looked like a poleaxed mule when this news broke. Before yesterday, the largest law firm in Canada was Borden Ladner Gervais with 753 lawyers; with this merger, Norton Rose will have more than three times that number. The Canadian firm with the most overseas offices was Macleod Dixon with four, followed by Faskens with three; Norton Rose will soon have nearly 35 offices outside Canada. This is like Gulliver buying a house in Lilliput; or, to borrow a metaphor from the US-Canada relationship, like the elephant moving in next to the mice. This is the world arriving on your doorstep without calling ahead — all the talk about globalization suddenly turned into the reality of a legal behemoth setting up shop down the street.

Norton Rose OR (as the new firm will be officially known) seems likely to affect the Canadian marketplace in a number of ways. Obviously, with a critical mass of lawyers in cities across Europe, Asia, the Middle East and Australasia, Norton Rose will be a serious contender to pick up Canadian multinational clients (or the Canadian work of multinationals with head offices elsewhere). That platform will be equally attractive to potential lateral hires at other Canadian firms who’ll want to know whether there are wider horizons than those they’re currently flying. Aside from possible client and partner losses, incumbent Canadian firms will also be faced with new management pressures: as the Legal Post‘s Mitch Kowalksi points out, Norton Rose brings unprecedented financial transparency (the firm makes its annual report public) as well as superior knowledge management and online services to Canada. All of this changes the competitive calculus of a law firm marketplace that traditionally has behaved more like a cozy fraternity of genteel rivals.

I can see two other Canadian impacts flowing from this merger. The first is the fact that a precedent for global mergers has now been set, and precedent is both a reassuring and a galvanizing strategic force: nothing motivates a law firm more than removing the fear of going first while simultaneously creating the fear of going last. Will we see a stampede of Canadian firms rushing into global mergers? Not likely. But a lot of executive committees will meet to talk about what this merger means for them and whether there are similar overseas opportunities that their firms must now consider. There’s been a sense here that there are too many large firms in Canada for a population and a capital base this size: the Potash Corporation of Saskatchewan notwithstanding, this country is not and isn’t likely to become the world’s corporate headquarters. Some people think that if the law of conflicts of interest were loosened, a wave of national mergers would soon follow. This is a marketplace more than ready for change and consolidation.

But here’s something else to think about: Norton Rose is on a major expansion tear. Last June, the firm made headlines when it merged with Australia’s well-regarded Deacons. Deneys Reitz itself was Chambers’ African Law Firm of the Year in 2006 and maintains a strong commercial law presence in the continent’s biggest economy. (It’s beyond debate that Norton Rose must be looking very hard at potential US merger partners as we speak.) Ogilvy Renault is not a “national” firm as we understand the term — it has little presence west of Toronto (though its Calgary office, opened last year, has grown to eight lawyers), and it still houses more lawyers in Quebec’s capital (Quebec City) than in Canada’s (Ottawa). But it represents global companies like Bombardier, SNC Lavalin and Royal Bank of Canada, and is widely considered a “blue chip” firm within the Canadian profession.

All of which is to say, each of these three firms brought serious credentials to the table, yet each agreed to give up their names and identities to join another firm. So we’re learning that global platform matters, and global capacity matters, and maybe above all, global brand matters — we might very well be on our way to the Legal Transformation Project‘s suggested outcome of a future filled with megafirms and boutiques.

But we might also keep this in mind: the Alternative Business Structure (ABS) provisions of the UK’s Legal Services Act come into effect next fall, and any law firm aiming to be a global powerhouse would want to consider all available options to finance and pursue such a strategy. And I do know this: any global law firm with an office in Canada and with access to global private capital would turn this country’s legal profession upside down, from acquiring talent to investing in online infrastructure to marketing its brand to forcing law societies across Canada to look hard at regulations surrounding non-lawyer investment in or ownership of law firms.

This is all extremely early days yet, and the merger won’t even take effect until next June. But my feeling is that something very big happened in this country’s legal profession yesterday. The sudden deregulation of financial markets in England on October 27, 1986, has come to be called the “Big Bang,” and the coming introduction of ABSs in England & Wales on October 6, 2011, has already been anointed as the legal profession’s own explosion. Well, that was one very loud sound we heard across Canada on November 15, 2010.

We all know the basics: China is already an economic giant whose engine has kept the global economy from tanking completely over the last couple of years. It holds nearly $1 trillion in US currency, it’s gobbling up natural resources everywhere from Canada to Africa to feed its phenomenal growth, and it’s widely considered the odds-on favourite to dominate, or at least co-dominate, the world in the decades to come. But its legal industry doesn’t seem to be considered a global threat by its western counterparts, thanks in part to a paucity of English speakers, the lack of common-law fluency, and difficulties with the enforcement of the rule of law in China generally.

While all of that may be true, it’s no reason to dismiss or take lightly the opportunities and threats presented by China’s recent but substantial interest in the provision of legal services. Firms that look upon China solely as a source of clients, rather than of potential competition, could be making a mistake. Here are four quick reasons to take China’s legal industry seriously.

1. Growth. China’s legal profession is growing astonishingly fast, from a nearly zero baseline. Thirty years ago, the entire country had only 212 lawyers in 79 law firms; today, those numbers are 150,000 and 14,000, respectively, a huge jump but still proportionally well below the American lawyer-to-population ratio. And there are many more Chinese lawyers on the way: Sida Liu of the University of Wisconsin-Madison told the Georgetown Law Firm Evolution conference in March that China had opened a staggering 500 new law schools in the last ten years. That’s probably too many for anyone’s good, but the critical mass will be there.

2. Sophistication. Chinese law firms are acquiring business and management skills faster than their Western counterparts did at similar stages of development. Leading Chinese (and Indian) firms are moving from eat-what-you-kill arrangements to lockstep partnerships, seeking to establish long-term enterprises that prioritize the firm’s welfare above the individual’s (something that comes more easily in China, culturally speaking, than in the west). Devotees of David Maister’s one-firm firm will recognize this approach. And interestingly, some Chinese firms are already talking about merit-based pay for associates — something still not widespread among US or UK firms.

3. Talent. In China’s legal talent wars, Western lawyers and firms are more often emerging on the losing side. This is happening in law firms — one example that stunned the Magic Circle was the departure of a top Clifford Chance capital markets partner to Shanghai firm King & Wood. But it’s also happening, more importantly, among clients: homegrown in-house counsel are becoming far more common in the Chinese offices of global companies, particularly thanks to their skill at navigating difficult compliance issues in a still-developing business environment. These lawyers have often been trained in foreign firms and law departments, but they’re now flexing their muscles independently.

4. Power. China is working to minimize or overcome those features of its society and economy that limit its global capacities. While English is not nearly as common in China as in India, the Chinese government is busily teaching 200 million of its citizens the language. China needn’t depend heavily on American or English business, not when it’s cutting $60 billion gas deals with Australia or looking to increase $60 billion worth of annual trade with India. One scholar argues that the gap between Chinese law and that practised in the west is narrowing. And as my Edge colleague Rob Millard has pointed out, as economic power diffuses from west to east, the day may well come when Chinese law, not Anglo-American common-law, is the default system for business transactions.

These are all reasons why China’s law firms and legal professionals deserve serious pondering in any consideration of the future legal services marketplace. But here’s one more, and it might end up being the most significant: China’s government has no qualms about owning and directing corporate entities on a global basis. China boasts the world’s two biggest banks and five more in the top 50 worldwide, and the government is an extremely active stakeholder in those banks and their business decisions. Picture the law firm equivalent: a global legal services provider financed and directed by a Chinese state apparatus with pockets so deep it makes massive LPOs look like garage startups by comparison. If you think competing with privately funded service providers with billions at their disposal would be tough, think about competing with a law firm backed by about a trillion US dollars and an extremely persuasive board of directors. That’s a law firm business model no one is contemplating in the West, and it would be a game-changer of the highest order.

This is not, let me emphasize, yet another paean to China’s imminent and inevitable rise to mega-power status: this is a country with plenty of challenges and problems, many of which figure to cause significant trouble and misery inside its borders within the next decade. Nor does it pretend to be an in-depth examination of China’s legal profession, which has issues of its own to cope with. Many things can and likely will still happen to push China off its current trajectory and slow its progress — but these should be delays, not failures. Corporations and governments worldwide are thinking hard about what to do when China truly hits its stride; the legal sector should be doing the same.

But Clifford Chance was also making smaller headlines a long way from both London and New York. From New Delhi came word that the firm was in talks with Indian law firm AZB & Partners about an alliance that would involve client referrals, joint training, consultation and joint marketing. Since foreign law firms are prohibited from practising law in India (more on that shortly), these firms instead have been forming strategic partnerships with Indian firms that could, were the legislative environment to change, rapidly segue into full-bore mergers. Other Magic Circle operations and some US firms have made similar  advances, but Clifford Chance is also the only firm to set up its own wholly-owned back-office and document management company in India.

Clifford Chance also cropped up in the news in late December when the Mumbai High Court ruled in its favour in a taxation dispute, reducing by more than $2 million the amount it owes to the Commissioner of Income Tax on fees earned on four energy infrastructure projects undertaken in India in the late 1990s.  Add to that CC’s controversial September hire of a top capital markets partner away from a leading Indian firm to its Singapore office, and its near-miss merger with Australian giant Malleson Stephen Jacques late last year, and this is a firm that’s making some serious investments in the southeast corner of the world map.

And rightly so. According to the Times, there were nearly 600 cross-border mergers and acquisitions in 2007 that involved an Indian element; on top of that, India’s government has launched an infrastructure program that reportedly will require $500 billion in foreign investment. The word “salivating” appears frequently  in media reports to describe global law firms’ anticipation of entering India and claiming a piece of what most people agree — recession or no recession — is an economic powder keg. But legislation prevents foreign law firms from operating in India and caps the number of equity partners in an Indian law firm at 20.

For the moment, anyway. Last month also brought word that the Limited Liability Partnership Act 2008 has now passed both houses of the Indian Parliament, such that the first Indian LLPs could be set up as early as April 1. The introduction of LLPs to India had causes and will have effects far beyond the legal profession, of course; but one of the expected results of the new LLP law is to constitute the first irrevocable steps towards the entry of foreign law firms and the general liberalization of the Indian legal marketplace. Add to that the anticipated resolution of a long-running court challenge to India’s legal marketplace laws by foreign firms White & Case and Chadbourne Parke, and you can understand why firms like Clifford Chance, despite financial challenges to their Atlantic operations, are intensely focused on India.

Now, this will still take time: very little happens overnight in India, and powerful political interests in Indian law firms oppose change. On top of that, a general election will be held this spring, and frankly, the Indian government has a lot more important and serious things on its mind to deal with these days. But this flurry of activity does illustrate why legal process outsourcing, the subject most often associated with India’s legal profession, is not the long-term future there.

Don’t get me wrong: LPO is still going strong and likely will accelerate, given mounting cost pressures on in-house departments in the US and UK. This month’s edition of Corporate Counsel magazine explores the Indian LPO market in depth, with this telling quote from Microsoft’s worldwide IP operations chief about patent outsourcing to Indian lawyers: “We went there to save money,” he acknowledges. “We stayed and expanded because we liked the quality of the work.” It wasn’t just okay, it was better. And India’s legal community continues to ramp up LPO capacity. The latest evidence is a post-graduate diploma in legal process outsourcing now being offered by the the Indira Gandhi National Open University — the world’s largest university, by the way — and leading Indian legal talent management house Rainmaker T&R. Indian LPO isn’t going away anytime soon.

But LPO is the starting point for India’s legal community, not its final destination. Indian lawyers give nothing away to their western counterparts on acumen, and they seem to be considerably ahead of them on efficiency and work ethic. When clients keep looking at the hourly rates charged by most Indian lawyers — between $20 and $40, according to the Corporate Counsel article — eventually, they stop asking, “Why are they so cheap?” And they start asking, “Why are our western lawyers so expensive?” That paradigmatic perspective shift is coming faster than many law firms think.

It would be unwise to suppose that Indian lawyers will forever be content to take on low-level legal work from western clients. I suspect that India’s lawyers regard a lot of current LPO work as useful training exercises to learn about western legal work habits, preferences and processes — stepping stones on the way to bigger and better things. I’m not about to bet against them, and events of the past several weeks indicate that even in the teeth of a recession, some pretty smart global law firms feel the same way.

But the article, which details how UK firms have vaulted past their US rivals into the Global 100′s upper echelons, is instructive for at least one reason, illustrated in this excerpt: “The irony is that the English firms have succeeded by following the lesson of their American peers: They’ve hedged their bets. For U.S. firms, in the past that has meant a healthy dose of litigation and bankruptcy work to balance a corporate shortfall. For the British, the strategy has been geographic: spreading their risk across several continents.”

With respect, referring to the Magic Circle firms’ international expansion as “hedging their bets” is to misconstrue offence for defence. It certainly makes sense to diversify a firm’s practice areas, a lesson Cadwalader learned a little too late. But that’s not a growth strategy, it’s a risk management tactic — a way of minimizing the damage inevitably associated with any practice area that’s prone (as most are) to waxing and waning.

Striking out into developing markets and placing a stake in foreign ground is the opposite of risk aversion — it’s an assertive approach that will certainly hurt overall profits for a number of years and could potentially blow up altogether. But in a global economy, it’s a risk that’s rapidly becoming a reality of doing business. Any firm that does or wants to count major entities among its clients can’t be content with a heavily fortified home base and a few outposts on the perimeter.

Check out the math in the article: Allen & Overy for the first time brought in more revenue from its overseas offices than it did from London. … At Clifford Chance, about $1.56 billion of the firm’s $2.66 billion in revenue came from international offices, with a growing proportion from emerging markets. An office in Abu Dhabi is expensive to open and incredibly difficult to keep populated  — but by 2018, if not well before, it will seem like the height of recklessness for a major law firm not to have established a solid base there.

Or for that matter, look at India. A long-running Indian court case (is there any other kind?) concerning the country’s ban on foreign law firms is moving towards resolution (HT to the FP Legal Post). No matter which way the court rules, that policy is coming to an end: Tony McDaid, the practice director at No5 Chambers, is confident that practice rights in the country will be liberalised and that law firms, both domestic lawyers and their global counterparts, need to start preparing now. “There will be major developments in this area in the next two years,” he predicts. “It is essential that relationships are formed now so an understanding of the market is met.”

It’s one thing for huge law firms with vast resources to be aggressive in this field (whether they choose to be or not). What can the rest of us do? Start by recognizing that although the giant firms start out with great advantages in money and name recognition, globalization levels the playing field for everyone, including you. You might not be able to patiently sustain a money-losing administrative office in Mumbai or Bengalru for years, but you can do what the big firms are doing: promote your profile and build relationships.

If you want a piece of the globalized action, blog about it, and link to the best bloggers or legal writers in your target jurisdiction. Identify local firms with a profile and vibe similar to yours, maybe through an international network, and strike up a correspondence (everyone from small towns to kindergarten classes chooses a “sister” town or school in another part of the world — your firm could do something similar). Find and connect with local professionals through LinkedIn, Plaxo, Twitter, Legal OnRamp or even Facebook — these tools exist specifically to give individual professionals the means to build networks without having to fly 12 times a year to Qatar or Beijing.

Whatever you end up doing, start by reorienting your thinking around what constitutes a “risky venture” in the law these days. Being conservative is now the risky approach; clinging to the status quo has the greater downside. This is not a good thing for most lawyers and the way they think. But that’s precisely why it can be a competitive weapon for you.

Well, one year on, says The Lawyer, Tyco is still partnering with Eversheds and singing its praises, especially since the firm must get Tyco to sign off on every legal task it performs on the client’s behalf in order to get paid for it. So how did Eversheds do? Today, it’s now sitting on no fewer than six similar arrangements with other companies, each of which looked at the Tyco deal and were impressed by what they saw. Now other London-based firms are trying to emulate Eversheds’ approach, including Hammonds and Pinsent Masons. So I’d say, on the whole, that this has been a pretty successful undertaking so far.

What really impressed me here, though, is how Tyco’s partnership with Eversheds indirectly helped bring the six other companies on board. When Eversheds first proposed the present arrangement to Tyco, it proffered two cutting-edge software programs: Dealtrack, a budgeting and cost management tool, and Rapid Resolution, a project management application for litigation. But Tyco wanted more: it wanted a way to precisely estimate the total amount it was spending on its legal services company-wide.

Eversheds rose to the challenge and integrated Dealtrack and Rapid Resolution into a more powerful new program called the Global Account Management System (GAMS). “The system breaks down a company’s legal spend by country, jurisdiction or practice area, providing a heat map [of] where money is being either wasted or used efficiently,” says The Lawyer. But there’s more to it than even that.

One of GAMS’ side effects has been to require consistency of service across all Eversheds offices, to make these cost estimates possible. That, in turn, has required global standardization efforts firm-wide and outsourcing of some tasks to less-costly offices, all of which is like catnip to clients. GAMS has been the key to allowing Eversheds to conclude its other Tyco-like client arrangements — but GAMS itself might not have been developed but for Tyco’s encouragement. And that is what you call a lawyer-client partnership.

What I like most about all this, however, is that Eversheds (and similarly innovative firms in the Magic Circle) is setting new standards for client service that other firms must now match. It’s a truism in the automotive industry that every luxury eventually becomes a standard feature: air conditioning, power steering, CD player, satellite radio, etc. By giving its clients a glimpse of several holy grails — cost certainty, fixed-fee arrangements, task control and service level guarantees, among others — Eversheds is turning a once-unattainable luxury into a standard element of its service delivery model. That’s not just a competitive advantage for Eversheds; that’s good news for clients everywhere.

Clients are going to get spoiled, and they’re going to start asking other law firms why they haven’t introduced similar measures. Eversheds’ London competitors are on the case right now, but so far, I don’t see their counterparts in the US or Canada moving to keep pace. Their mistake, if so.

Any law firm worth its charter has always been active in its community, of course, but in this age of megafirms with global reach, we’re starting to see super-national firms display a truly remarkable degree of involvement in issues and organizations that transcend the usual local undertakings. Check out DLA Piper, whose New Perimeter project is an incredible piece of work: a worldwide pro bono initiative that has seen 13,000 lawyer hours contributed to, inter alia, drafting new judicial laws in Kosovo, restructuring a micro-lending project, developing a worldwide food bank system and creating a human rights center in southern Africa. This is work on the scale of the CBA’s sterling International Development Committee, but supported by a for-profit firm rather than a non-profit association.

It would be naive to overlook the obvious marketing and recruitment benefits of McCarthy’s move here: the press release highlights the firm’s other pro bono efforts, including its support of Pro Bono Students Canada. This obviously invests the firm with some cachet among law students and new lawyers, many of whom take overseas development work very seriously. McCarthys, of course, will have to back up this commitment with active participation in Avocats Sans Frontieres (and now I have Peter Gabriel’s Games Without Frontiers stuck in my head), because students can also tell real commitments from mere gestures. But I prefer to think McCarthys means what it says here about its pro bono commitment, and that what we’re seeing really is the white-hot trend of globalization applied to the age-old tradition of lawyers’ community service.

What’s particularly interesting about this article, however, is the unattractive picture of the Western legal profession that comes through — this is the image the profession has managed to develop for itself throughout the rest of the world. If your North American or European firm wants to be a global player in the law, you should be aware that your reputation is now preceding you.

Some highlights:

On training: “A recent study conducted by Harvard Law School and LexisNexis reveals that 75 per cent of US law graduates admit they do not have the necessary skills to practise law. … It is typical for Western law students to graduate from law school without ever having learned how to draft a contract. …[Y]oung lawyers receive no organised, on-the-job training. They learn as they go along, by trial and error, with their firms’ corporate clients footing the bill. … Our training program accomplishes what Western law schools and law firms have failed to achieve, namely, the systematic preparation of young lawyers to provide quality legal services.”

On language barriers: “[A]t least in the US, law graduates for the most part are notoriously incapable of writing effectively in English. The problem is so severe that some large US law firms now assign a writing coach to each incoming associate. However, most lawyers in the West never receive this kind of training. By contrast, reputable legal services offshoring companies in India train all their attorneys in English writing.”

On certification: “[I]n part because India has no bar exam, some commentators have suggested that Indian lawyers working for legal offshoring companies should be required to pass a certification test.… But who will develop a certification system for Western lawyers, many of whom lack skills needed to practise law properly? Regarding bar exams in the US, they are useless, except as a public relations device for the legal profession. As noted by New York University Law Professor Harold I. Subin, they test ‘nothing relevant to the practice of law…. The bar exam [serves] the same socializing purpose as hazing … drinking in useless legal data is the profession’s equivalent of swallowing goldfish or great quantities of beer, and leads on exam day to a similar regurgitative result.’”

On costs: “[E]xamine what a client pays for when it hires a typical large Western law firm (although there are exceptions): (a) staggering real estate costs … (b) having most of the work done by newly minted … associates who admittedly lack many of the skills needed to practise law, but yet are paid a starting salary of $160,000 per year, and who are learning as they go along, at the expense of clients … (c) padding of time sheets and/or an unnecessary stretching out of work assignments, encouraged by an hourly billing system that rewards fraud and inefficiency … and (d) generally a high-quality level of service, due to editing and supervision by talented senior lawyers, but at a cost that clients are no longer willing to tolerate.”

On ethics: “[V]irtually all major law firms in the US routinely use non-licensed attorneys to perform legal work, and they bill their clients for it. The hours of summer associates, who have neither graduated from law school nor passed a bar exam, are billed out to clients at rates as high as $260 per hour or more. Moreover, the work of first-year associates, who start work at law firms before their bar exam results are in (and who often fail on their first attempt), is billed out to clients for as much as $360 per hour or more. This is all permissible, because the work is supervised by licensed attorneys.”

On corporate counsel: “Corporations, not Western law firms, will drive the market in the years ahead. … For example, a major Detroit auto manufacturer approached SDD Global for offshore litigation support. When we asked what the reaction of their usual outside law firms would be to most of the legal work being done in India, the answer was unambiguous: ‘Our outside law firms will operate the way we tell them to.’”

On the future: “[T]he growth and development of the legal offshoring industry in India will help bring about a major change in the way legal services are delivered in the West. This will be a monumental, history-making development. It will help economies around the world as well as India’s. It will contribute to a better, more equitable world, in which artificial barriers across countries and continents do not hold back the most efficient and enthusiastic people from doing what they do best.

This post originally appeared at Slaw on October 1, 2007.

Earlier this month, I visited San Francisco for the first time. I’d long been fascinated by the thought of a city built on a geological time bomb, and walking its streets was quite an experience.

Everyone knows there’ll be a massive seismic rupture underneath the city someday. But San Franciscans are neither hot nor bothered by it; they go about their lives in their historic city. Their chances of being engulfed in an earthquake remain extraordinarily small, and there’s nothing they can do to prevent it anyway, so why worry?

I think you could draw a few parallels between San Francisco and the legal profession. Great forces are in motion, seismic change is in the offing, and while prosperity reigns today, ripping upheaval is inevitable. I don’t pretend for a moment that lawyers are threatened with annihilation – so long as there’s law, there’ll be lawyers – but after the strike comes, we’ll have trouble recognizing the landscape.

You could trace the first tremor back to December 2004 in London. Thanks to the report of David Clementi, unprecedented changes are underway in the United Kingdom’s legal profession. In May, the UK government introduced a draft Legal Services Bill, and just this week, issued its response to amendments recommended in July by a parliamentary committee that consulted with lawyers.

In a nutshell, under the new legislation, complaints about lawyers will be overseen by a new Legal Services Board and Office for Legal Complaints; Alternative Business Structures (perhaps more familiar to us as MDPs) would allow lawyers to go into business with non-lawyers; and both non-lawyer ownership of law firms and public trading of shares in law firms would be permissible. (By the way, three Australian states have already taken lawyer discipline out of lawyers’ hands, and New Jersey now allows law firms to own other firms as subsidiaries.)

The Clementi Report was initially triggered by the Law Society of England & Wales’ perceived inability to investigate complaints against lawyers in a timely or effective manner. That has not been a problem in Canada, and I doubt it’ll become one. But the wide-ranging legal reform that followed had a far greater ambit — it was designed to render the delivery of legal services consumer-friendly. “[T]he rules governing the legal professions,” said the Fair Trade Office, “should be fully subject to competition law, and unjustified restrictions on competition should be removed.”

There’s no reason that similar sentiments wouldn’t fly here – and in fact, the Commissioner of Competition has already flown them. The Commissioner gave a speech in May 2006 that referenced, among other things, tests proposed in the European Commission’s February 2004 Report on Competition in the Professions to determine whether professions are governing themselves in the public interest. We’ll be examining this issue more closely in the January 2007 issue of National, but I would imagine the Commissioner might be interested that a governing body of lawyers would like to regulate other groups offering legal services. The US Federal Trade Commission and Department of Justice warned the ABA almost five years ago to be careful not to define “the practice of law” so restrictively that antitrust agencies become alarmed.

So: in England, wholesale and perhaps precedent-setting changes are being made to how law firms operate and how lawyers are governed. Governments elsewhere are taking a keen interest in lawyers’ efforts to decide what constitutes the practice of law. And in Canada, we have a demographic groundswell to deal with: the imminent decline in solo and small-firm lawyers practising in rural Canada.

As reports from both Ontario and B.C. make clear, lawyers outside Canada’s urban centers are older than average and are not being replaced by younger lawyers graduating from law school. As non-urban Canada empties of lawyers, the continuing demand for legal services will be met by a dwindling supply of lawyers to meet them. And a not-unlikely outcome of that combination could be a potential deregulation of legal services delivery — someone has to provide legal services to these people, governments might reason, and if lawyers can’t manage it, we’ll let someone else do it.

None of this takes into account the many other roiling forces that are affecting the profession: the growing commoditization of some legal services, the trend towards outsourcing and offshoring of legal services in a flat world, the rise of Generation Y and the gradual diminishment of Boomer power, and an increasingly dissatisfied client base. Take all this together, and you can see why some people think that the next ten or twenty years could see tremendous upheaval in how we practise law.

As I said earlier this week, predictions of great change are almost always premature – futurists are rarely asked back for encore performances. But invariably, the change does eventually arrive, usually when no one’s looking for it. It might be wise to keep one ear to the ground.

Had you predicted in 1996 that lawyers ten years’ hence could routinely connect with clients from a coffee shop, using only a laptop and a portable phone, you would have been considered a little odd. Had you gone further and suggested that work routinely doled out to articling students could in 2006 be handed instead to legal operations in Bangalore and Mumbai, you would’ve stopped getting invitations to parties.

The new theater of operations for lawyers is no longer national, or even continental as NAFTA had foreseen, but truly global. This will affect not just large-firm lawyers, but also solos and small-firm practitioners, because the market’s expectations of what lawyers can do — in terms of speed, location, expertise and cost — are ratcheting up. Global standards are incredibly demanding.

Lawyers need to recognize this and try to keep clients’ expectations realistic. The challenge is that from now on, “realistic expectations” is going to be a moving target.

This post originally appeared as the editorial in the June 2006 issue of National magazine.