According to Thomson Reuters, traditional BigLaw firms are facing increased competition from the rapid emergence of NewLaw firms, forcing them to adapt the way they are structured and their take-up of disruptive technologies.
“The Australian legal market is seeing declining growth, revenues and employed lawyer numbers, so BigLaw providers need to rethink the way they are structured and their take-up of disruptive technologies. In other words, they need to rethink everything about the way they do business,” Thomson Reuters commercial director Carl Olson said.
“Commercially savvy clients are no longer willing to pay top dollar for low-level, repetitive work that could benefit from more cost-effective outsourcing arrangements, or greater automation in a law firm.
“Alternative fee structures therefore offer greater perceived certainty, value, benefits and efficiency than the traditional model of billing based on hours and volume of ‘manpower’.”
To combat the competition, Mr Olson said BigLaw firms need to place more of an emphasis on providing a flexible, client-focused service.
“In a more complex and globalised business environment with a geographically diverse workforce, sophisticated clients demand better value, more transparency and better service from their lawyers,” he said.
“The Australian legal market is client-centric. NewLaw firms stand out in their ability to let the client choose to pay for the services they think they need, rather than purchasing a lawyer’s full services over the course of a case.”
In addition, Mr Olson recommended BigLaw firms to up the ante when it comes to encouraging flexible working arrangements.
“BigLaw firms tend to be hierarchical, with a core number of partners supported by a larger cohort of solicitors and articled clerks, all charging clients at hourly rates,” Mr Olson said.
“A key differentiator of the NewLaw model matches a lean, low-overhead, highly-skilled team with the client’s specific requirements. This is made possible through remote-working technology, which lets NewLaw firms attract the best staff and offer them flexible working conditions.
“These firms don’t have to support a huge number of staff, nor do they need to maintain expensively impressive premises. Consequently, staff members gain work/life balance while clients receive a high level of service at a lower cost.”
Lastly, a greater focus on using new or “disruptive” technology is vital for BigLaw firms to succeed, according to Mr Olson.
“NewLaw providers seek to couple high-quality legal ability with innovative, client-focused delivery methods that use cutting-edge IT and process innovation,” he said.
“Investing in technology products to deliver greater intra-business or business-to-business connectivity, communication, practice management, cost reductions and process efficiencies are hallmarks of NewLaw providers.
“This can include anything from cloud-based systems, data analytics and workflow or task-oriented apps now to blockchain technology and artificial intelligence as time goes by.”