Recently, I've been working with a number of clients in the legal industry. Everyone I've met has described the change they see coming from a unique perspective. George Beaton's new book, "NewLaw - New Rules" provides a brilliant overview.

 NewLaw New Rules - A conversation about the future of the legal services industry by George Beaton.

NewLaw New Rules - A conversation about the future of the legal services industry by George Beaton.

The book follows a very unusual format. It's actually a "thread book". I.e. it's a narrated collection of very recent blog posts and comments by a variety of industry participants. From a cynical perspective, this could be seen as an expedient way to cheaply generate content. Actually though, this approach turns out to be well suited to the fast paced conversation going on right now in the blogosphere. Beaton taps into and recognises a wide variety of commentators and does a very good job of stringing all these pieces into a digestible narrative. He also overlays a structured assessment of the key trends and characteristics of NewLaw and OldLaw. The outcome is a great overview of this particular industry under disruption. It's delivered in a novel way, immersing the reader in the online conversation, as it happens. 

First Beaton introduces some of the trends that are causing this disruption. In short, clients are becoming more powerful. They are starting to demand fixed fees for their legal matters and they are looking for a more business-oriented response from lawyers. They are starting to expect answers to their business problems, not just an explanation of the legal context. They also expect the resourcing and costs of a particular matter to be pragmatic rather than conservative. It is not always in the business' best interest to explore every single research angle or scenario. 

Lawyers are changing too. At least the new ones are. New, young lawyers are not satisfied with the traditional work environment with long hours, lack of flexibility and a seemingly endless grind to achieve the rank and benefits of partnership.

These challenges to the traditional "guild-like" legal culture and partnership business model are particularly noticeable at the bottom of the market where most startups are emerging. This is where disruption usually starts, according to Clay Christiansen. Many lawyers serving larger clients and more complex scenarios argue that their business will not be affected. However this is also the usual pattern in industries under disruption. Larger, incumbent players don't fully recognise the threat emerging from the bottom of the market until it is too late, when disruptors find a way to offer higher quality or more efficient service higher and higher in the market. 

Technology is playing a part too.  Many aspects of the legal process and value chain are being impacted including research, discovery, document management, workflow management, client service, marketing and more. Some firms such as Axiom harness a unique business model underpinned by a significant investment in technology to offer legal services more flexibly and efficiently. Other startups such as LegalZoom deliver or harness these technologies as their core differentiator.

Hallmarks of BigLaw vs NewLaw

Beaton summarises the differences between the two models with the following tables. Note that the "Big" in BigLaw is not really about the size of the firm, it's about these hallmarks.

 Hallmarks of "BigLaw". From NewLaw New Rules by George Beaton.

Hallmarks of "BigLaw". From NewLaw New Rules by George Beaton.

Clearly BigLaw faces some challenges. Perhaps the most intractable is the impact of the partnership ownership structure. As well as inhibiting the risky decisions required to achieve change, this structure focuses firms on hourly utilisation of lawyers rather than value created. This dis-incentivises investment in the process improvement, technology and business model changes required to achieve greater efficiency and competitiveness.

The NewLaw model is as follows: 

 Hallmarks of "NewLaw" from NewLaw, New Rules by George Beaton.

Hallmarks of "NewLaw" from NewLaw, New Rules by George Beaton.

This business model is better configured to pursue more value at lower cost for the client and the firm.

"BigLaw typically asks 'How can I use technology to do what I do better?' Whereas NewLaw simply asks 'How can it be done better?'"  Steven Tyndall

NewLaw comes in many forms. Beaton's typology categorises them as:

  • NewLaw service providers such as Axiom.
  • Virtual legal service providers such as Clearspire.
  • Legal process outsourcers (LPO) such as Pangea3.
  • Online legal marketplaces such as LawyerSelect.
  • Client captives (i.e. innovative in-house law departments).
  • Legal document suppliers such as LegalZoom.
  • Fixed fee traditional law firms such as Marque Lawyers.

Challenges

So is this thread-book an "echo chamber" reflecting only the opinions of the converted? Is there another point of view? Certainly fixed fee is no silver bullet and not the right solution for every matter. Nonetheless, at the heart of the matter is the need for cultural and structural change to unleash technology-powered efficiencies. 

“Thinking like a lawyer needs to be thinking like a value-creating legal issues problem-solver.” Silvia Hodges Silverstein.

So who should read this book? Certainly anyone in the legal industry would find it fascinating and a great way to get their head above the noise and detail of their own firm to see the big picture as communicated by some progressive colleagues. 

For people in the business of digital, technology and innovation, it's also a fascinating book. It is a reminder that innovation is about plenty more than technology. It's only when we understand the cultural and structural issues in the specific industry and business that we are supporting, that we can help them successfully harness disruption.

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