Will NewLaw be the winner in 2021?

January 2, 2021

The beginning of the New Year is always the time of taking crystal balls out of the box and making predictions for what is to come in the next year. After 2020, which was a year like no other, trying to forecast the future seems to be a little bit naive. Nevertheless, despite black swans, which occur from time to time, some trends are quite evident and will probably continue to increase.

Needless to say, the legal industry, like almost any other industry, has been hugely impacted by the turmoil caused by the Covid-19 pandemic. The challenges to do more for less, frozen headcounts in many legal departments, the pressure to replace the billable hour and the growing importance of the implementation of technology in legal work were also visible in the previous years. The current pandemic has only accelerated these trends in an unprecedented manner. For the last few years, there has also been another trend in the legal industry, which now seems to be gaining increasing attention from lawyers around the world: the NewLaw movement.

The term NewLaw was probably first coined by Eric Chin in 2013. Jordan Furlong, a legal market analyst, has explained this definition as: “any model, process, or tool that represents a significantly different approach to the creation or provision of legal services than what the legal profession traditionally has employed.” (Source: Jordan Furlong and Sean Larkan, A Brief Inventory of NewLaw in Australia (25 August 2014) Australian legal Practice Management Association, http://www.alpma.com.au/a-survival-guide-for-legal-practice-managers/inventory-of-new-law-in-Australia)

NewLaw emerged in opposition to BigLaw and other traditional models of law firms in the 2010s, which was a decade of recovering from the Great Recession of 2008 and laters, when budgets for outside counsel were being cut in many corporate legal departments.

It is often said that the NewLaw movement changes the way of doing business in law, providing legal services and organizing work in law firms. Why does it matter in 2021?

Brace yourself; NewLaw is coming!

The economic situation in the New Year has never been so unpredictable as it is in 2021 but we may be sure, that clients will put the pressure on law firms in terms of costs of legal services. In a hardly predictible business environment client will not only expect lower fees, but above all, more certainty in term of their legal spend. For traditional law firms changing the paradigm of the billable hour may be quite difficult, while NewLaw businesses have challenged this revenue model by the wide adoption of the Alternative Fee Arrangements. NewLaw companies are able to offer alternative fee structures, because in many cases they have changed the way of providing legal services from traditional bespoke consultancy into Legal Service-as-a-Product. This kind of pricing strategy is especially excpected by clients in case of repetitive, high volume legal work, which can be automatized or standarized.

Pricing models are not the only differentiator of NewLaw companies from BigLaw and traditional law firms. What has become one of the key competitive advantages of NewLaw is a wide adoption of technology in legal work. Why will it matter in 2021? In a rapidly changing business environment, where all we can expect is uncertainty, timing is of utmost importance and legal technology enables lawyers to deliver results of their work much faster and in high quality. Using artificial intelligence to analyze large volume of documentation, e-discovery and document automation are some of the examples of how adoption of new technology changes the way how legal work is done by NewLaw companies. Furthermore, NewLaw firms utilize Legal Tech tools to offer them to their clients in a self-service model (which is a huge change of paradigm for a traditional law firms). One of good examples of such a strategy is what an innovative Croatian law firm Porobija & Špoljarić has been doing: in collaboration with Legal Sifter, it offers to their clients an artificial intelligence platform to self-analyze contracts. In 2021 we can expect more law firms to follow this path.

As corporate legal departments have been increasingly adopting legal technology and building legal operations functions, and this trend will probably continue in 2021, there is place for specialized consultancy services in this respect. This new business opportunity, which has been noticed by the NewLaw companies. For instance PwC in Australia and the UK has launched NewLaw divisions, which are focused on advising in-house legal teams on optimising their work by selecting and implemanting technology, measuring metrics and providing solutions fot a better access to data.

What can be foreseen to be a growing trend in 2021 is a wider adoption of design thinking into legal work. Putting client in the center of law firms' attention also means a more humanized approach to provoding legal advice. Embedding design thinking principles into NewLaw firms strategy has become one of their distinguishing features. NewLaw companies understand, that clients increasingly expect more straightforward approach to law and more plain language in legal documents. I also believe, that in 2021 we will hear more about User Experience in legal services.

All these features of the NewLaw firms, which are still perceived by many law firms as innovation, has all chance to become standards in the next decade. I hope, that 2021 will be the year of continuous transformation of the legal industry into this direction.

Roman Koch

Roman Koch is an attorney at law and an in-house legal counsel, experienced in advising to international and domestic manufacturing and retail companies in Poland and CEE Region and financial institutions. Involved in international Legal Tech projects, including the implementation of contract analysis AI-based software in a global tyre manufacturing company. Focused on optimization of legal advisory and legal operations through digital transformation.

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