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Time for a New Kind of Law Firm

Insight Michael Moradzadeh Michael Moradzadeh · March 10, 2011

The traditional law firm is based on an outdated feudal system that creates inefficiency, unhappy lawyers, and underserved clients.  Adopting business models from other industries, cloud computing, and virtualization has allowed for new law firm models.  These models allow attorneys better lives through increased freedom and productivity, and also allow for better client service.

Traditional law firms are organized with a strict hierarchical design.  The hierarchy is determined by seniority, thus encouraging an up-or-out model.  If a young associate works hard enough and bills enough hours, he/she eventually rises to the rank of partner.  Once they become partner, after about ten years of chasing paper, they are asked to develop business for the first time.  Of course, this is an entirely new skill set that this attorney has never developed before, and may not be equipped for.  After all, they made partner for long hours in the office, not necessarily because of their ability to attract clients.

After many years, if this attorney successfully generates enough business, he/she is asked to take on an administrative role.  Once again the attorney is thrust into a position that had nothing to do with their previous success, or even their interest.  After decades of working hard as lawyers and business developers, they are expected to shift towards administration.  All the while they are expected to maintain their prior roles of billing many hours and bringing in new clients.  This combines with bureaucratic needs of the traditional law firm model and office politics to result in a miserable life.

There is a better way.  The hierarchical structure described above is a legacy of feudal society with its guilds and apprenticeships.  Indeed, traditional law firms are among the last professions clinging on to this legacy.  The industrial revolution brought with more efficient business models and the ability to specialize: those who prefer to administer focussed on administration, those who wanted to do sales and business development made that their careers, and so forth.  That is in most cases, but not with the traditional law firm.

The internet age, into which we are still transitioning, allows for even more specialization and freedom.  Attorneys no longer need to be tethered to their desk.  Virtual law firms and cloud computing allow them to work from anywhere.  They could work from their clients' offices, from law libraries, from offices near their homes, or even from an office inside their homes if they prefer.  They can do all this while maintaining all the benefits of being part of an international law firm.  Cloud computing makes it possible to access all of one's documents from a smart phone.  They can then easily video conference with their clients and colleagues at any time from their computers or even phones without interruption.  All this comes at very low costs, allowing for substantial savings to the clients and higher profits to the attorneys.  

This also means that down time is no longer lost in the office, and the beauracracy of traditional firms can be left behind.  Attorneys could get paid based on work done and clients brought in, rather than hours wasted doing nothing.  This also translates to more stable law firms since overhead would no longer threaten to destroy them as soon as work temporarily slowed down.  More stable law firms are better for lawyers and clients for obvious reasons.

Thus, the adoption of long tested modern business models and new technologies are ushering in a new kind of law firm.  One that uses cloud technology but thinks beyond the "virtual law from" model to bring together the best of both worlds: traditional law firms and virtual law firms.  I wrote about this in my last blog called Beyond the Virtual Law Firm: Thinking Outside the Cloud.  

Alternative fee structures are another very important way that law firms need to change, I discuss that in the following blog: The Life and Death of the Billable Hour

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