Globalization’s effect on the Legal Industry

We live in the age of globalization and free market economics. Globalization refers to the integration of economic activities across borders. Technological and intellectual innovation has been the driving force behind globalization. It has reduced the cost of transportation and communication, thereby propelling profitable economic activity over large distances. The process of globalization has impacted every sphere of life in modern society and the legal arena is no exception.

Globalization has been an inherent part of the human journey. Humankind’s ability to navigate the seas has facilitated the birth of global empires, movement of people and expansion in commerce since ages, and the industrial revolution has only accelerated the process. While the steam locomotive, steamship and telegraph drove the globalization of the late 19th and early 20th centuries, the jet aircraft, internet and mobile phones are fuelling the globalization of today.

Globalization impacts the legal field in manifold ways. It boosts international trade and commerce by facilitating the easy movement of capital, labor, goods and services across national borders, thus driving economic growth and the need for trained legal professionals.

Globalization demands a new kind of legal practitioner. The new-age lawyer, whether they be a corporate lawyer or criminal defense attorney, should be an industry expert or an authority on the law as specialized domains such as project finance, M&As and arbitrations are more industry-specific and less about local regulations. Industry experts are increasingly driving transactions and reducing the local, non-specialist lawyers to supporting and advisory roles. The legal professionals who work for global clients must be able to conduct themselves in a foreign language and be well-versed with international norms and usages as the interface lawyers that were found in foreign desks of international law firms have become a relic of the past.

Globalization is changing the dynamics of the legal business. A decade ago, global law firms setting up shop in a new area would only take on the international work of local companies. But today, the same global firms are competing with domestic law firms for local work as the local firms are unable to contest on equal terms. As a result, the neighborhood law firms are gradually losing ground to their global counterparts.

Globalization is re-writing client expectations. Today’s clients are more demanding than their predecessors, compelling law firms to rethink their conventional ways of functioning. Technology is having a dramatic impact on the legal industry. Knowledge management systems are improving client interactions and reducing costs, and social media is reshaping client relationships. As a result of these innovations, the balance of power is shifting into the hands of clients. Globalization has resulted in the adoption of global norms in professional liability, ethics and non-discrimination policies. Legal firms are increasingly attuning themselves to global practices to meet the requirements of worldwide clients and remain relevant in the global marketplace.

Legal firms are taking the globalization route by merging with larger counterparts, making acquisitions and entering into strategic alliances. This spurt in globalization is being driven by the internet boom, automation of legal processes and new technology tools. Globalization will continue to reshape the landscape of the legal industry in the coming years as law firms seek to expand their footprints worldwide.

Globalization is reshaping the demand for legal services in the emerging economies of India, China and Brazil. The gradual liberalization of these economies since the 1990s has led to major foreign investment and privatization, and unleashed competitive market forces like never before. The frenzied economic activity has spurred the demand for new laws and legal institutions such as investment and securities laws, trade and competition authorities, and the need for new lawyers. These economies have thus given birth to a corporate legal sector consisting of large law firms and sophisticated in-house legal departments.

The workforce is becoming multi-generational in an increasingly globalized world. Four generations, consisting of traditionalists, baby boomers, Generation X and Generation Y, are rubbing shoulders at the workplace, as legal professionals work beyond their retirement age. The legal firms have to harness the energies of this diverse workforce to achieve the common good of the organization.

Virtual law firms are becoming the norm of the day. Mobile devices and web technology are making it possible for legal professionals to work remotely from home or a virtual law office. Virtual law offices allow flexible working hours and foster a better work-life balance among the legal professionals. Moreover, thanks to the power of the virtual world, the clients are able to avail expert legal services from any part of the world.

The Legal Process Outsourcing sector (LPO) is another manifestation of globalization in the legal arena. The 1990s witnessed the phenomenon of Business Process Outsourcing (BPO), wherein businesses outsourced backroom accounting and IT functions to BPO companies. LPO is business process outsourcing in which large legal firms establish offshore operations in low-cost locations in order to minimize costs, increase flexibility and expand capabilities.

There is a growing trend towards specialized boutique firms focused on a specific area of law such as international law, intellectual property, patents and family laws, to cater to the demands of the global marketplace. Legal firms are establishing themselves as niche experts in their geographic locations.

Globalization has changed the rules of the game, making it incumbent for the legal industry to introspect on where it is today and where it is headed, and prepare itself for an increasingly inter-connected world. The legal systems in various countries have to learn from each other to bring about the necessary institutional changes and evolution of laws.

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