How BigLaw and NewLaw are Collaborating for a Better Future

The terms “BigLaw” and “NewLaw” were first coined by professional advisory firm Beaton Capital in 2013, and refer to two very different business models for the provision of legal services. In the legal and financial press however, BigLaw and NewLaw providers are often portrayed as polar opposites, much in the manner of David versus Goliath.

BigLaw is often taken to signify a:

  • full-service, nationally or globally recognised law firm employing large numbers of predominantly full-time lawyers drawn from top-tier universities who are remunerated accordingly.
  • firm that is structured in the manner of a pyramid (lawyers progressing to associateship then to partnership in a set number of years in an up-or-out style ‘tournament’).
  • firm that uses a traditional billing model, such as charging by the hour.

While NewLaw is often taken to signify a firm that:

  • adopts disruptive technology that allows remote or mobile working.
  • seeks to match a lean, low-overhead legal team that is targeted to the client’s specific requirements, enabling greater work flexibility for the firm’s own staff and optimising outcomes and costs for the client.
  • is able to ‘unbundle’ or tailor its legal offering, therefore offering clients more value for money.
  • is able to offer clients pricing structures that are not anchored to billable hours spent or costly fixed overheads and are, instead, decided (upfront or on an ongoing basis) with client input.

While some commentators are calling the emergence of the NewLaw model the death of BigLaw, a recent report by The Melbourne Law School and Thomson Reuters Peer Monitor®, 2016 Australia: State of the Legal Market, suggests that regardless of the size of a law firm, success in an age of disruption requires four elements:

  • Ability:Technical and serviceability.
  • Stability: Intra-firm collegiality and cohesion.
  • Affinity:Focus and investment on building trusted client relationships.
  • Agility:The ability to sense relevant changes in client and competitor arenas, identify creative options, make good commercial choices, and adapt to meet new needs and realise new opportunities.

According to the report, the growth of multidisciplinary practices (MDPs), use of digital solutions and NewLaw models mean the available share of total legal spend going to traditional law firms is expected to contract 40 per cent by 2021; only firms demonstrating all four of the above elements are likely to outperform in such a market going forward.

The same report reveals that the growth of NewLaw has seen certain firms – traditionally characterised as BigLaw – adopt hedging strategies, recalibrate aspects of their business model, expand their offerings by collaborating with NewLaw firms or taking up aspects of the NewLaw model.

Many of the most interesting recent developments in the NewLaw space, according to the report, involve BigLaw firms or ex-BigLaw practitioners. The following (among others) are cited as notable examples:

Since its establishment in 2014, Australian NewLaw firm Hive Legal has collaborated with BigLaw firms on several occasions, particularly for major landmark transactions.

Melissa Lyon, business development consultant for Hive Legal, says, “This is a trend we will see more as clients look for innovative and efficient ways to work with their legal advisers, often across multiple firms and organisations, to achieve the best outcomes.”

The report also cites some recent examples of BigLaw firms embracing the kinds of digital technologies more commonly associated with NewLaw, including:

In a legal services industry that is seeing declining client demand, growth and revenue, as well as a drop in employment, agility and discernment about what to conserve and what to let go is crucial for firms that want to continue outperforming in challenging times.

While still in its nascent stages, collaboration between BigLaw and NewLaw firms can only signal fresh and productive times ahead for an industry in which strategic and structural changes are long overdue.

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