Eric
Chin
is
an
Associate
at
Beaton
Capital
who
works
closely
with
senior
management
in
law
and
accounting
firms
on
strategy,
M&A
and
business
model
innovation
engagements
across
Australia,
New
Zealand,
Hong
Kong,
Singapore
and
other
markets
in
the
Asia-Pacific
region.
He
introduced
the
‘NewLaw’
neologism
as
the
business
model
antithesis
of
traditional
law
firms
which
has
since
been
adopted
by
the
industry
and
Twittersphere.
An
astute
student
of
the
professions,
he
has
written
on
this
subject
in
the
Australasian
Law
Management
Journal,
Global
Legal
Post,
Managing
Partner
Magazine,
Asia
Law
Portal
and
an
ebook
titled
‘NewLaw
New
Rules’.
Eric
recently
keynoted
at
Law
Institute
of
Victoria’s
2015
Conference
of
Council
on
disruptive
innovation
in
the
legal
industry
and
presented
at
The
Conference
Board’s
Asia
Pacific
Chief
Legal
Officers
Council
on
the
future
of
legal
services.
Eric,
in
an
article
on
the
Beaton
Capital
blog
you
created
the
distinction
between
Big
Law
and
New
Law.
How
do
you
define
New
Law
and
a
New
Law
firm?
We
were
first
inspired
to
create
the
‘NewLaw’
neologism
after
Mark
Harris,
the
founder
of
Axiom
stated
in
an
interview
with
Bloomberg
Law
in
July
2013
that
“part
of
the
challenge
of
innovating
and
creating
a
new
category
is
that
there
is
no
vocabulary
to
support
that
and
there
is
no
satisfying
label
yet”.
At
Beaton
Capital
we
have
now
come
to
define
NewLaw
as
the
business
model
antithesis
of
the
traditional
law
firm.
In
other
words
we
differentiate
the
two
through
a
business
model
lens.
I
should
first
explain
that
‘BigLaw’,
is
not
about
big
law
firms,
it’s
a
description
of
the
business
model
used
by
most
law
firms
today.
In
traditional
law
firm
business
models,
the
lawyers
play
extensive
role
in
winning
work
(through
promotion
of
personal
brands),
doing
work
(focus
on
legal
excellence
requires
top
legal
talent
that
incurs
high
fixed
costs)
and
governing
the
firm
(only
lawyers
have
access
to
ownership
and
therefore
share
of
profit).
In
contrast,
the
NewLaw
firm
business
model
epitomises
the
efficient
division
of
labour
where
professional
sales
personnel
are
in
charge
of
winning
work
(notice
that
NewLaw
firms
are
not
branded
by
the
founder’s
surname).
While
lawyers
do
the
work
(focus
on
commercial
relevance
requiring
business
savvy
talent)
and
are
hired
on a
flexible
basis,
only
incurring
a
cost
when
they
are
producing.
NewLaw
firms
are
usually
corporately
owned,
introducing
non-lawyer
shareholders
that
bring
with
them
diverse
perspectives.
As
NewLaw
is
an
emerging
topic
there
are
many
different
types
still
emerging,
we
have
seen
4
main
categories
of
NewLaw
firms,
namely:
1.
Dispersed
legal
talent
providers:
Examples
include
Axiom,
Conduit,
AdventBalance,
Bespoke
Law,
Keystone
Law,
Riverview
Law,
Plexus
and
Hive
Legal
2.
Legal
process
outsourcers:
Examples
include
Elevate
Services,
Exigent,
Pangea3,
CPA
Global
and
Integrion
3.
Legal
document
providers:
Examples
include
LegalZoom,
Rocket
Lawyer
and
LawPath
4.
Artificial
intelligence
providers:
Examples
include
Judicata,
Ravel,
Lex
Machina
and
ROSS
Many
Big
Law
firms
have
read
your
article
and
the
e-book
by
George
Beaton.
Have
they
reacted
in
some
way?
We
have
seen
varied
responses
from
the
big
law
contingent.
One
of
the
most
public
response
we
have
received
is
from
Peter
Kalis
of
K&L
Gates
(you
can
read
his
response
here:
http://www.thelawyer.com/analysis/behind-the-law/industry-leaders/peter-kalis-theres-room-enough-for-big-law-and-lpos/3022283.article).
From
my
perspective,
having
worked
in
the
legal
profession
for
the
last
six
years,
I
have
seen
the
boardroom
agenda
of
law
firms
changing
from
consolidation,
globalisation
(as
we
saw
the
creation
of
Dentons,
Hogan
Lovells,
Norton
Rose
Fulbright,
etc),
Asia
(as
we
saw
Mallesons
Stephen
Jaques
becoming
King
&
Wood
Mallesons),
rise
of
the
general
counsel
(as
clients
assert
their
buying
power
on
law
firms)
and
now
disruptive
innovation
in
the
form
of
NewLaw
firms.
Law
firm
leaders
and
general
counsel
alike,
are
curious
about
the
emergence
of
NewLaw
firms
and
its
implications.
We
have
been
invited
to
talk
about
this
topic
as a
way
to
shed
light
to
the
wider
partnership
these
trends
engulfing
the
profession.
The
managing
partner
of a
$billion
law
firm
told
us
the
biggest
challenge
for
law
firm
leaders
is
to
bring
the
outside
world
into
the
firm,
looking
at
what
competitors
are
doing
and
how
clients
are
changing.
In
many
ways,
we
at
Beaton
Capital
as
students
of
the
legal
profession
provide
that
independent
voice
on
this
topic.
There
are
quite
a
few
firms
that
have
fully
adopted
New
Law
in
their
company
structure
and
service
delivery.
Which
firms
would
you
recommend
as a
model?
Yes
we
have
seen
the
emergence
increased
adoption
of
NewLaw
model
in
servicing
the
traditional
law
firms’
highly
sophisticated
clients.
We
saw
the
dispersed
talent
model
of
Lawyers
on
Demand
from
Berwin
Leighton
Paisner
as
the
early
mover
in
2007,
then
Eversheds
Agile
from
Eversheds
in
2011.
In
2013,
Pinsent
Masons
launched
Vario,
followed
by
Allen
&
Overy’s
Peerpoint.
Most
recently
Simmons
&
Simons
launched
Adaptive
while
in
Australia
Corrs
Chambers
Westgarth
in
Australia
launched
Orbit
and
Addleshaw
Goddard
is
reportedly
launching
its
equivalent.
We
have
also
seen
law
firms
launching
their
own
onshore
and
offshore
outsourcing
facilities
with
Manchester
being
the
main
onshore
destination
and
Belfast
and
Glasgow
being
the
main
offshore
destinations
for
UK
firms.
It
is
hard
to
point
to
any
one
particular
firm
as
the
model.
We
believe
law
firms
of
the
future
are
ones
that
will
be
able
to
resource
its
teams
using
a
combination
of
the
traditional
law
firm
model,
the
dispersed
talent
model
and
the
outsourcing
facilities
to
match
the
clients’
servicing
and
budget
needs.
New
Law
is
also
defined
by
alternative
fee
arrangements
or
fixed
fees.
Do
clients
push
enough
in
order
to
establish
fixed
fees
and
price
transparency?
Out
of
the
global
financial
crisis,
we
saw
large
corporations
scrutinising
all
their
expense
line
item,
this
included
the
legal
department;
traditionally
a
sacred
cow.
The
shift
to a
client’s
market
in
the
legal
industry
is
most
evident
on
the
pricing
front
as
clients
start
to
exercise
their
buying
power
to
negotiate
better
deals
and
greater
transparency.
This
of
course
led
to
two
responses
in
the
market,
firstly
traditional
law
firms
would
respond
but
only
at
the
client’s
prompt.
Secondly
the
adoption
rate
of
NewLaw
firms
would
increase
as
they
provided
a
viable
alternative
for
legal
departments..
Through
the
work
we
do
for
law
firms,
both
large
and
small,
we
also
have
to
recognise
that
the
legal
industry
is
made
up
of
two
major
category
of
clients,
firstly
the
large
and
highly
sophisticated
buyer
and
user
of
legal
services
who
typically
incur
large
and
recurring
legal
expenses.
This
group
of
clients
are
at
the
forefront
of
changing
the
legal
services
industry
by
trying
different
ways
(including
adoption
of
NewLaw
services)
of
servicing
their
legal
needs.
The
second
category
of
clients
are
relatively
smaller
organisations
or
private
individuals
who
are
generally
price
takers
and
are
less
likely
to
have
the
buying
power
to
push
enough
to
establish
fixed
fees
and
price
transparency.
Within
the
New
Law
model
you
consider
alternative
financing.
We've
seen
already
quite
a
few
firms
on
the
stock
market.
Is
this
a
durable
trend
or a
desperate
effort
to
stay
competitive?
Access
to
alternative
financing
is a
monumental
change
in
the
legal
services
industry.
While
this
first
developed
in
Australia
when
Slater
&
Gordon
listed
on
the
stock
exchange
in
2007
which
supercharged
its
growth
as
the
largest
plaintiff
law
firm
in
Australia
and
now
in
the
UK.
We
have
also
seen
IPOs
of
plaintiff
law
firm,
Shine
Lawyers
and
intellectual
property
specialist
firm,
Spruson
&
Ferguson.
Access
to
capital
allows
law
firms
to
invest
in
technology,
processes
and
grow
via
acquisitions.
We
see
the
listing
of
law
firms
on
the
stock
market
as
the
natural
progression
of
the
legal
profession
that
is
evolving
from
the
profession
of
law
to
the
business
of
law
paradigm.
The
technological
evolution
seems
to
accelerate
changes
in
the
industry.
What
do
you
think
will
a
Law
firm
look
like
within
10
years?
Yes
technological
evolution
and
innovation
have
accelerated
changes
in
this
knowledge
intensive
industry.
We
have
lived
through
the
information
technology
outsourcing
of
the
1980s,
then
the
business
process
outsourcing
of
the
1990s,
followed
by
the
knowledge
process
outsourcing
of
the
2000s
which
led
to
the
creation
of
legal
process
outsourcing
companies
like
Elevate
Services,
Exigent,
Pangea3,
CPA
Global
and
Integrion.
Now
we
are
seeing
the
rise
of
crowdsourcing
in
the
2010s,
with
Axiom
and
its
ilk
being
propelled
onto
the
mainstream.
We
believe
the
2020s
will
mark
the
emergence
of
artificial
intelligence
in
the
legal
arena,
noting
IBM
Watson
is
commercialising
into
specific
industries,
including
law,
after
the
success
it
has
achieved
in
the
medical
industry
My
colleague,
Dr
George
Beaton
is
publishing
another
book
in
2016
which
prophesise
that
law
firms
in
2025
will
have
multiple
business
models
as
opposed
to
the
monolithic
model
we
now
see
at
law
firms.
The
liberalization
of
the
industry
in
Australia
and
in
the
UK
has
forced
changes.
What’s
your
judgment
on
this
liberalization
and
do
you
think
this
is
also
a
trend
for
other
markets,
especially
in
Europe?
The
liberalisation
has
spawned
innovation
in
the
market.
Take
for
instance
Kent
County
Council’s
Kent
Legal
Services,
established
by
Geoff
Wild
as a
separate
legal
services
business
that
now
sells
services
to
more
than
300
other
public
sector
bodies
in
the
UK.
We
are
also
witnessing
the
ongoing
debate
in
Canada
to
liberalise
and
allow
alternative
business
structures
(ABS)
to
operate.
Unlike
parts
of
Europe
where
tax
accountants
and
lawyers
are
allowed
to
practice
in
multidisciplinary
partnerships
(MDPs),
the
introduction
of
ABS
has
make
possible
the
re-entry
of
Big
Four
accounting
firms
as
we
saw
PwC,
EY
and
KPMG
acquiring
ABS
licences
in
the
UK.
To
our
knowledge
the
Council
of
Bars
and
Law
Societies
of
Europe
looked
into
the
introduction
of
ABS
in
2009
but
decided
not
to
go
ahead
because
regulating
MDPs
and
legal
disciplinary
practices
already
required
a
delicate
balancing
of
economic
and
non-economic
interests.
Both
the
developments
in
Australia
and
the
UK
may
point
to
reference
points
for
Europe
in
the
future
and
it
will
be
interesting
to
see
how
Canada
will
progress
their
current
investigation.
Finally,
as a
consultant
to
Law
firms,
where
do
you
find
major
obstacles
to
change?
Does
the
partner
model
fit
into
our
modern
and
dynamic
world?
Change
management
is a
universal
challenge
for
businesses,
this
is
more
pronounced
in a
partnership
environment.
The
partnership
model
provides
the
best
of
both
worlds,
it
creates
a
strong
alignment
of
ownership,
management
and
operators
in
the
business
through
partners
who
lead
teams.
The
challenge
is
that
forces
of
conservatism
are
strong
in
the
partnership
model,
making
it
harder
to
change
when
consensus
is
required.
In a
parallel
knowledge
intensive
industry,
Dominic
Barton
the
Global
Managing
Director
of
McKinsey
&
Company
notes
that
disrupting
his
firm
requires
unyielding
leadership
in a
partnership
environment
to
bring
corporate
antibodies,
that
dispel
big
and
often
non-traditional
ideas
in
the
pursuit
of
profitability
today,
along
the
journey.
This
is
the
same
challenge
that
law
firm
leaders
have
in
change
management
in a
partnership
environment.
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