And in the world of law, there are some new kids on the block. Consultant Eric Chin coins the term ‘NewLaw’ to describe them. Alternative legal service providers. They’re tech-savvy, progressive, and, yes, highly disruptive. They’ve appeared on the legal scene and started to shake things up.
That same year George Beaton writes NewLaw, New Rules. He proclaims the advent of a new legal business model. One totally unlike that of traditional law firms. Rapid changes are occuring in how clients buy legal services, and how providers are responding.
But, by the time the likes of George and Eric are taking note, the NewLaw party is already in full swing. One of the first to arrive was Axiom, the original NewLaw hipster, founded in 2000. Today, it’s the world’s fastest growing alternative legal service provider. Five years after Axiom came LegalForce. Then, in 2006, Paragon arrived on the scene. Since then, the number of NewLaw firms has continued to grow and grow.
But what exactly is NewLaw?
Essentially, it’s as the name suggests. ‘NewLaw’ firms have a new, alternative way of doing things.
Firstly, technology. They love it. We’re talking cloud-based computing, efficiency apps, data analytics to decide new strategies, and software to speed up and streamline communication between teams and clients. Gadget or gizmo, they want it.
Secondly, NewLaw firms embrace flexible work. Does it makes more sense to work from home than to commute 2 hours to the office? Then stay at home! The result? Low-overheads, a better work-life balance, happier employees, and a leaner, more efficient work-flow. No wonder those young upstarts are looking so smug!
Thirdly, NewLaw firms offer alternative pricing strategies. Yes, you heard. No more billable hour. Shocker. Instead, NewLaw firms offer fixed-fee structures. Rather than being charged by the hour and manpower spent on a case, clients pay for the services they think they need. Not only does this mean less administration but it encourages lawyers to consider long-term investment rather than short-term profit. Obviously, clients are thrilled to no longer feel like they’re being squeezed for all their worth by lawyers desperate for juice – and this means they’re far more likely to return.
NewLaw told Big Law that the 21st century had arrived. And today it’s continuing to disrupt the legal landscape.
Last year, one of the largest private equity houses in the world invested $500m on UnitedLex. Half a billion invested in a NewLaw company says a lot. Then there’s the Bowmark capital investment in Lawyers on Demand, the EY acquisition of Riverview Law and the continued growth of Axiom. The smartest, most money-savvy people around know NewLaw is a big player. And so do young lawyers, who, faced with the tedious traditional path to a partnership, are like “nah, no thanks”, turning instead to NewLaw’s superior work-life balance.
And we’re not just talking NewLaw firms. Then there’s also the rise of semi-automated, standardised online legal services. For example, RoadTrafficRepresentation.com, a digital platform which offers a free online assessment of your case and a potential paid-for phone call and representation in court. Then there’s referral-based legal service platforms who connect customers to legal practitioners – kinda like the ‘Trip Advisor’ of the legal world.
And it won’t be long before law gets ‘ubered’ with on-demand apps that provide people with the legal information they need with just a few swipes and clicks.
What about Big Law? Suddenly not so big anymore?
A new report – Global Legal Services in a Disruptive Word – published in February 2018, surveyed general counsels and in-house lawyers across 41 different countries. And it’s clear. The traditional law firms don’t cut it anymore. 50% of respondents said they witnessed these firms struggling to operate across international borders. In fact, 83% of the lawyers at the top 30 ‘international law firms’ are based in Europe or North America – so not global at all, if you ask us. As a result, 46% of general counsels said they already use or intend to use alternative service providers. Soz guys. You’ve been dumped.
But Big Law knows what’s afoot. After spending the first few years ignoring the start-ups, today they’re getting in on the action. In 2016, AdventBalance announced a merger with Lawyers On Demand, with an aim to create the biggest international NewLaw firm. Not long after, Deloitte Legal announced their affiliation with Conduit Law. Traditional firms are increasingly opening low cost delivery centres, and some have launched their own flexible work initiatives; for example Allen & Overy and Peerpoint or Corrs Chambers Westgarth and Orbit. Fixed fee arrangements are also on the cards.
Watch out NewLaw. They’re coming for you!
Indeed, it’s not all glory and triumph for NewLaw. Many businesses still favour the traditional route. Why? Well, there’s a level of prestige and familiarity associated with the traditional law firm, and companies sometimes perceive new as risky. Plus NewLaw’s dispersed and virtual business model can unsettle those who value face-to-face contact.
So for now, Big Law firms continue to dominate the legal market. And if they modernise their mindset, they’ll have the scale, geographic reach, resources, talent pool, and client bases to be a real threat to NewLaw firms.
But will Big Law change? We doubt it. True disruption is not just developing an app or allowing people to telecommute. It’s a reworking of the entire structure of the law firm. While Big Law might pay lip service to new ideas, they’re lacking large-scale, firm-wide innovation.
So is NewLaw the future?
In short, yes. Firms of the future are going to be a lot more NewLaw and lot less Big Law. But true disruption must benefit both sides – lawyer and client. So how can NewLaw stay disruptive?
Firstly, by using technology to make legal services more efficient, and therefore more affordable and accessible. This doesn’t mean robot-lawyers, so chill. People need reliable human advisers, and yes, even the shiftiest, shadiest lawyer is easier to trust than a machine. Instead we’re talking about automating the monotonous repetitive work – so there’s more time for fun! Kidding. So you can give more time to that all important strategizing.
What will this new technology look like? Well, Blockchain, for one. The technology, which allows records of transactions to be kept on a digital ledger, is being used to build tools that will help lawyers draft contracts, record commercial transactions, and verify legal documents. Take OpenLaw, for example, which automatically generates legal agreements and embeds smart contracts. Or Integra Ledger, which provides a permissioned blockchain to increase the integrity of legal documents. Such tools could dramatically free up time and enhance security.
NewLaw firms must also achieve the scale and geographic reach to compete with Big Law. And they should be truly borderless, able to move easily between different global regulatory systems.
Lawyers in this brave NewLaw world will need to be adaptable and creative. Able to quickly mobilise a virtual team dispersed across the world. Able to sense when change is coming and stay ahead of the curve. Oh, and able to tell right from wrong – no biggy. Research shows that younger generations are more ethically-minded as consumers. Having a moral compass is vital to stand out from the crowd. And, also, karma.
So. Who do you stand with? NewLaw or Big Law? Yep, we thought so. NewLaw, new world, new rules, new you. Let’s go.
Cora Harrison, January 2019