How to be Smart About Being Different
The legal profession is a conservative lot when it comes to developing innovative business models. Despite the loss of market shares to alternative internet based legal service providers such as LegalZoom and Rocket Lawyer, most law firms are still clinging to the traditional law firm business model of churning out as many billable hours as possible.
Some progressive law firms, however, are finding success in developing alternative practice models outside the traditional law firm culture. Many of these structures are characterized by the delivery of lean legal services through innovative use of technology coupled with a more intimate attorney-client relationship.
For example, InSource Law, based in Reno, offers lawyer ‘secondment’, whereby an attorney works alongside the client’s team, at the client’s office, for a set price and duration. The aim is to lower the cost of legal services by eliminating unnecessary overheads while working more closely with the client.
Despite the fact that these progressive practice models can deliver better value to the customer by doing away with overheads, most law practices continue to resist change, plodding along in hopes of being retained by a wealthy client willing to pay $500 per hour.
There are some good reasons lawyers are slow to change the way they deliver legal services. Lawyers are trained to rely on ‘precedent’, or prior decisions by courts, when making their case. The law doesn’t always take well to innovation and favors the predictability of past judicial decisions. That mentality of using only what is known to be safe and acceptable permeates the strategic thinking of most attorneys.
Another reason law firms are reluctant to develop new practice models is the heavy regulation of the legal profession by bar associations. American lawyers face restrictions on, among other things, how they advertise, structure their business, and distribute profits. The evolution of rules of professional conduct has not kept pace with modern business practices and the advent of technology-based platforms, especially social media. No lawyer wants to be called out by a bar association for a business structure or practice that may violate professional rules of conduct.
Then there’s the liability factor. Any new business model brings the risk of unknowns. The threat of professional liability should be at the forefront of any lawyer’s business decisions. More conservative legal malpractice insurance carriers shy away from alternative and innovative practice models when deciding whether to issue a policy. This is especially common when delivering legal services via the internet and across state lines.
To continue growth American law firms need to skillfully adapt to changing markets and client needs. This means pioneering alternative practice methods in a way that mitigates professional liability while upholding high ethical standards to protect the public.
Similarly, bar associations should be progressive in amending rules of professional conduct as it becomes harder for lawyers to compete in a declining market. Lawyers are still constrained by rules that never contemplated the digitalization of the business world. Promoting the interests of members of the bar must be carefully balanced against the interest of protecting the public from dodgy practices.
The biggest changes in the American legal profession have been occurring in major cities. As a lawyer admitted in the United States and Australia, I recognize some of these foreign alternative legal service models popping up in America. Several international firms such as Lawyers on Demand are setting up overseas practice models on U.S. soil and now have a presence in New York and San Francisco.
In America, with the world’s largest legal services market, we tend to ignore what’s happening in the profession overseas. This is short sighted. Lawyers favor precedent, and there are tried and tested alternative legal service models outside the United States. Many common law countries, including Australia and Canada, are proving more progressive in adapting professional rules to reflect changing business practices and markets. For example, Canadian legal industry regulators have been studying the prospect of allowing alternative business structures (ABSs), as permitted in Australia. This would enable attorneys to share profits with other forms of non-attorney businesses such as accountants and escrow officers. Australia has developed a robust body of regulation and case law around ABSs to protect the public while permitting lawyers the opportunity to pioneer better ways of serving clients. American bar associations should consider the experiences of foreign profession regulators when grappling with rule amendments.
InSource Law developed its alternative practice model of providing onsite corporate legal services at the client’s office with the insights gained while working overseas in the Australian legal market from 2009 to 2016. Rather than requiring that the client come to a high-rise office with chandeliers and mahogany desks, these lawyers were going to client’s business to work directly with the client. Now American businesses are discovering the value of seconded attorneys and InSource Law is the first to offer the service in Nevada.
Being different does not always turn out to be a good thing. Lawyers, like other professionals such as doctors and accountants, owe it to the consumer and other business stake holders to be cautious when venturing out on the limb of an unproven practice model. Likewise, regulatory bodies must be cautious when adopting new professional rules. This is why knowledge of a successful alternative practice model abroad can be useful to bar associations and law firms in regulating and pioneering alternative legal services.
Look beyond the confines of your own country for practice models that have proven effective. Consider whether these strategies can succeed in your corner of world. Advantage can be gained in understanding the challenges faced by these alternative business structures abroad and how these foreign regulatory bodies and law firms have adapted. We can mitigate risk and maximize our chances of success if we are smart about being different.
Lead Attorney & Owner