In recent years, the rise and rise of ‘NewLaw’ has continued at a gathering pace.
Many attributes of the traditional law firm business model have been questioned, marginalised and completely avoided by new entrants. For many law firms who until now have simply observed the developing trends, the pressure to at least iterate, if not fundamentally change, current business models has become overwhelming.
Matthew Burgess, a founder of 2 award winning ‘NewLaw’ businesses in the last 5 years, spoke to Insights about the benefits of, and misconceptions surrounding, the new normal for law firms and lawyers alike.
“The starting point for any discussion about law firm business models tends to be what service as a lawyer do you provide? In particular are you selling time or solutions?” said Burgess
“If you are selling time, almost every aspect of a truly new approach to law does not make sense. In turn, if you a solution provider, virtually all aspects of the incumbent business model are irrelevant. The traditional law firm rewards partners and staff alike if they are:
- willing to embrace working extremely long hours;
- excel at rote learning;
- technology adverse; and
- unwaveringly arrogant in rejecting anything that may undermine the traditional personalised bespoke legal service offering (such as alternative pricing models, offshoring, outsourcing and automation).”
The key issue for achieving success in this context is abandoning not just time billing but time recording as well, as Burgess explains. “Those firms that are achieving significant success in what is otherwise thought to be a stagnant or even shrinking market have no timesheets – this common thread is something that can no longer be ignored by any lawyer.”
“We have seen 5 fundamental impacts from running a truly ‘timeless’ firm” Burgess continues. “Each of these in isolation would have a significant positive impact on any law firm; in combination they create such a compelling value proposition that clients are rewarding the early adopters with their legal spend.”
Two examples Burgess mentions from his business are –
1. Being appointed to the panels of 2 of the 5 largest financial institutions in Australia; and
2. Currently assisting around 7% of the BRW wealthiest 200 list.
Burgess summarises the 5 aspects successful NewLaw providers understand when they choose to sell solutions, and not time, as follows:
1. Parkinson’s Law is a serious challenge even without timesheets – perhaps counterintuitively our key performance metric is still time related; that being – what is the duration between agreeing on a scope of work and delivering that scope to the customer.
2. Communication both internally and with customers is vital. Many law firms only exist because of Murphy’s Law (i.e. everything that can go wrong will go wrong). Successful fixed pricing almost entirely depends on carefully planning and agreeing a defined scope. If there is a legitimate change to scope that could not have been identified at the start of a project, there must be real time communication within the team and immediate engagement with the customer.
3. Centralisation of all team learnings in a logical and easily accessible manner is critical. This includes using ‘AARs’, being after action reviews. This ‘non-billable’ concept is rarely, if ever, done in a time billing firm. In a fixed price firm it is a discipline that must become automatic.
4. The Goldilocks Principle helps explain why we always provide the customer with alternatives in the level of service that is provided. Time billing lawyers remain essentially the only industry in the western world that do not empower their customers to choose service levels.
5. The Donkey Principle explains that the best performing lawyers in a time billing model are generally of least benefit in a fixed price model – the impact of this culturally cannot be underestimated.”
Ultimately Burgess claims that it was not until his firms stopped recording time that the cultural shift finally took place to allow them to focus on what was valuable to the client.