Evolutionary economics and law department–law firm relations

The discipline of evolutionary economics “looks at the economy as an ever-changing, complex adaptive system—not unlike that of biological evolution. Immune systems, language, the law, and the Internet are all examples of other complex adaptive systems. They learn and grow from the bottom up.” This grand concept from Fast Co., June 2008 at 44, suggests a metaphor for how to interpret the constantly changing ties between law departments and the law firms they retain.

The context and content between buyer and service provider evolve (See my posts of Aug. 20, 2006: the evolution metaphor and law department managers. Sometimes people explicitly invoke the metaphor or gradual change toward fitness (See my posts of March 15, 2006: DuPont’s ECA procedures “evolved over the past decade”; April 27, 2007: four changes in knowledge management over time; May 31, 2006: emergent strategy development; Dec. 17, 2007: the morphing of outside counsel guidelines over time.). The concept of evolution applies to workload and capabilities of in-house lawyers (See my posts of May 1, 2005: evolutionary computation as a tool for making decisions; Dec. 11, 2007: evolutionary design and patents; and Sept. 5, 2007: agent-based models of complex systems.).

An arms race goes on between in-house managers of outside counsel and the partners they retain. In the evolution of outside counsel management (or client management from the standpoint of law firms), Darwinian mutations occur as departments and firms produce permutations of countless management techniques and every now and then spawn something new. The article uses an unusual word: “Both evolution and the economy are autocatalytic, which means they each contain self-driving feedback loops.” For example, as law departments demand more detailed bills from firms, firms develop better training for their timekeepers and closer review of their pre-bills. No one imposes change on the players in the legal services market; the changes emerge from the stew of competitive forces.