According to CommBank’s latest Legal Market Pulse, only one in eight top-tier firms and four out of 32 mid-tier firms view the NewLaw firms and alternative business model (ABM) firms as a substantial threat to their market share today.
That being said, however, both top and mid-tier firms noted the NewLaw and ABM impact would grow over time.
When asked whether they agree that NewLaw and ABM firms will be a substantial threat to their market share in two years’ time, half of the two-tier firms surveyed said that NewLaw and ABM competitors are likely to pose a “serious challenge”.
Mid-tiers appear to be not as threatened, with 24 out of 32 respondents saying they are either “neutral” or “unconcerned” about the threat of NewLaw and ABM firms in two years’ time.
“This heightened level of awareness in the top-tier is symptomatic of the challenge NewLaw businesses increasingly represent to Australia’s largest law firms,” the report said.
“Technologically sophisticated, with strong brands, a growing client base and an international reach, these new entrants seem well-positioned to make inroads among the institutional clientele who have previously been the top-tier’s natural market.”
Despite not viewing it as a substantial threat today, the report found that both top-tier and mid-tier firms have been implementing aspects of the NewLaw model.
According to the results, seven out of eight top-tier firms stated they had adopted key elements of NewLaw in their own businesses, while 17 out of 32 mid-tier firms said they had done the same.
“I think the industry has definitely come to realise that [NewLaw] is an unstoppable force and will lead to major change,” said Sam Nickless, COO at Gilbert + Tobin.
Mr Nickless noted in the report, Gilbert + Tobin is “simultaneously pursuing three different aspects of innovation: partnerships with NewLaw firms; investments in technology; and rebundling traditional legal services in unfamiliar ways”.
Also in the report, he reinforced how his firm’s relationship with NewLaw firm LegalVision has created numerous benefits for both parties.
He explained that LegalVision is increasingly working with Gilbert + Tobin to manage what is often described as “bread and butter work” for large corporate clients. In addition, he noted that there’s a “subscription-based model which offers pricing certainty to the client and guaranteed cash flow to the firm”.
“It’s a model where Gilbert +Tobin has set up the framework and can provide high-level guidance or escalation for very complex matters, but most of the day-to-day work is done by LegalVision,” Mr Nickless said.
“LegalVision uses their technology and their process skills to do that at an affordable rate, bringing us a part of that client’s work that we probably wouldn’t normally be able to service economically.
“Partnering with LegalVision has also allowed Gilbert + Tobin to tap into the dynamic culture of a NewLaw start-up currently achieving 6 to 8 per cent month-on-month revenue growth.
“They have a founder and other key people, all with equity and all very focused on delivering great outcomes. We wanted to have that kind of culture – we didn’t want to remake LegalVision as just another law firm.”