Nicole Bradick has caused a bit of a stir in the legal world in the past few years. An innovator with a keen head for business, Nicole regularly promotes new ways of providing legal services in today’s world. Named an ABA Journal Legal Rebel in 2012 and also named to the Fastcase 50 List in 2014, Nicole is the Director of Strategic Initiatives and Development at Potomac Law Group; and founder of Custom Counsel, a provider of freelance legal services.
In this two part series, we speak to US lawyer, Nicole Bradick, about the business of law. This week we find out if business models in law are lagging behind other kinds of business in terms of innovation and whether the new breed of legal service providers are more client-focussed.
Is the legal industry 10, 20 years behind in driving a business model forward that works?
I wouldn’t say that the legal industry as a whole is behind. A model is only ever “behind” if there is a significant lag between the needs of clients and the ability of the provider to offer real solutions due to a limiting model. Client needs really started changing about 10-15 years ago as companies began tightening legal department budgets. These changing needs, of course, became more acute with the recession. I think the industry has responded fairly appropriately to that change. I think that it’s important for the industry (including regulators and firms) to always try to think 10+ years ahead, but I see clients today as having a reasonably responsive marketplace and a broad range of options for purchasing legal services.
In the last decade, we’ve seen a proliferation of new firms emerging in response to changing client needs. These new firms, including Potomac Law, have responded quickly, taking a keen look at the current legal marketplace and shifts both with client needs and lawyers’ desire to break from the traditional confines of legal practice. These firms are using the latest technology and applying modern business practices to the law with some excellent results. Clients are indicating their approval of these new models by shifting more of their work to new model law firms as well as alternative legal service providers. Clients need more for less, and new firms, LPOs, and other providers are addressing that need.
We have also seen some promising movement from some of the more traditional firms. The large multinational firms are giant ships and it is a challenge for them to change course. Some aren’t moving at all, but many of them are making strides. They are tied down by the old highly-leveraged model that compensated partners excessively and paid associates unreasonably high salaries. Once those kinds of expectations are set, it is quite difficult to move away from. But for the bet-the-firm work, clients seem to still be seeing value in working with the large firms. As long as clients find value, the model is still working. It’s just working for fewer categories of work than it has in the past, requiring firms to make internal adjustments to turn stagnant revenue into greater profits (typically accomplished by laying off staff and associates, downsizing physical space, and promoting fewer attorneys to equity partnership). It will be interesting to see the long-term implications of some of these decisions as firms struggle to adapt. But where the traditional model is unable to keep up, new firms and other alternative providers are stepping in to fill the gap. To me, that’s the sign of an industry that’s keeping pace.
Would it be fair to say that the new wave of legal firms like Potomac Law Group are more client-focussed; and less tangled up in traditional processes?
I don’t know if it’s fair to say that new firms are more client-focused, because I do believe that most lawyers and firms care about their clients and their problems. But I see the new breed of firms as having the ability to be more responsive to client needs, with the flexibility to offer more tailored solutions.
One of the benefits of creating a next generation firm from whole cloth is that you can start with a single inquiry: Who are our clients and what do they need? All decisions about how to structure a firm can then be based entirely on the answer to that question. This allows new firms to create precisely the right kind of model to best serve the firm’s clients. It’s frankly a luxury more established firms cannot enjoy, although they certainly can make strides to adapt where possible.
Most of the “new model” firms use alternative billing systems and have no billable hour requirements at all for their attorneys, and it’s certainly a self-selecting group of attorneys who are interested in working this way. Typically, these lawyers are interested in the pure practice of law without the traditional firm politics and the oft-cited “churn and burn” ethos. Lawyers who approach their practice from this perspective (and without unreasonable management pressures) are usually interested in representing fewer clients with greater responsiveness and attentiveness. They have more freedom to determine how to best meet a client’s needs, rather than worrying about how many billable hours it may generate.
I would certainly agree that new model firms generally are less tangled up in traditional processes. Many of the new firms approach the actual structure of the firm with a focus on a leaner management that is able to make decisions and address client needs in a much more efficient way. This low level of bureaucracy is often a relief to clients. Right now, clients are looking for value, greater control over how firms are undertaking their representation, and greater financial accountability. They want to see that their matters are well-managed and appropriately staffed for maximum productivity. In my experience, the newer, more nimble firms are able to meet these needs without hesitation.
What are the emerging trends in in-house legal practice at the moment?
From an operations perspective, legal departments are really focusing on creating internal efficiencies and figuring out the best staffing strategies to provide more value for less to the enterprise. These efforts are pretty wide-ranging, from improved knowledge management strategies to using more paralegals or other non-lawyer professionals where a law degree is not a necessity. Certainly, legal departments are looking at different ways to purchase more commoditized legal services. They are taking a hard look at how and where they are spending money, and with the aid of some great analytics tools, they are able to make some data-driven decisions about what makes most sense. I see legal departments trying to limit the number of outside providers they are working with, but at the same time broadening the type of provider they are willing to work with.
Where’s it all going?
I think that legal departments are now really focusing on becoming well-run, efficient units. Some already are, and some are playing catch-up to the modern business practices already being implemented by their clients. I see greater use of operations professionals by legal departments in the future to make sure that the department is maximizing efficiencies and to provide more reportable metrics to the executive management. Stated another way, the focus going forward will be on not only creating efficiencies, but also being able to quantitatively demonstrate the resulting success of those efforts. The use of procurement professionals only seems to be increasing as well.
Next time we continue our discussion and find out from Nicole what is expected of in-house lawyers in their role within a larger company; and how they can use technology towards becoming more business-orientated and demonstrating the value of their role to the business as a whole.