Scan a list of legal trade headlines right now, and one or more are likely to reference “new law,” which has come to broadly mean leveraging technology to provide legal services in novel ways. Some law firms may ignore this trend and continue their “old law” approach – which could soon drive them out of business. Instead, firm leaders and administrators should embrace this shift and the tangible benefits that come with it.

The end of doing everything in-house

“New law” will be the death knell of vertical integration at law firms. The idea that everything must be done within the firm, whether it relates to the actual practice of law or not, is now irrelevant. A law firm’s core business is to provide legal services, and any other function outside of that should be examined to determine if it’s in the firm’s best interest to do it in-house. Law firms are not experts at everything, and many aspects of running a business can and should be left to outside experts.

For example, what law firm would deny the value of using artificial intelligence to parse endless reams of electronic data to prepare for discovery? Very few. Similarly, firms might be able to shift functions such as billing and marketing, and even reception and recruiting to companies that specialize in those tasks.

New law means asking questions about a firm’s core activities 

In the “new law” era, firms will have to make decisions about what they want to do in-house and what to outsource. Four questions can guide that analysis: 

• How important is this function to the firm? 

• What is the cost of the firm doing it versus outsourcing? 

• How good are we as a firm at doing this? 

• Do we have the right people in those roles, or could we use outside experts? 

Applying these questions to any operation within the firm will reveal whether it’s something that should continue in-house or if there are alternatives. For example, is it cost-effective to have a billing department when outside companies specialize in this and can offer the same service at a reduced (and variable) expense?

Consider whether a firm understands a role enough to identify and hire the best people, and if the firm performs that task more efficiently than a company that specializes in that service.  It may be more effective to outsource that function in order to increase a firm’s client satisfaction and service. 

Law firms must determine what is considered an essential service that must be done in-house. A firm working with wealthy clients may prioritize having staff in roles that deliver high-touch and personalized service. Billing and marketing, however, could perhaps be outsourced. By contrast, a law firm might make use of a virtual receptionist service to handle large volumes of inquiries and ensure no balls are dropped in answering calls and scheduling consults that lead to new clients.

“New law” offers firms the ability to be deliberate in deciding which functions must be done by someone working for the firm and which can be best left to outside providers. No one approach will work for every firm — and that’s the point. Whatever it takes for a firm to provide excellent service while increasing profitability is what should be done.

Make the shift or fade away

Many firms might see “new law” as a threat — but, in fact, it’s an opportunity. Those who make this shift away from vertical integration will benefit from increased profitability while also ensuring their clients receive the best possible service at every interaction.  

Firms must stop thinking they can do it all. Lawyers know the law, and that should be the focus of the firm. Anything else that’s added must be weighed and considered against what’s most beneficial to the firm. 

There is also a risk of not going through this shift now. Firms that engage in this process will likely become leaner, more competitive, and outbid those who don’t. A firm that trims overhead and broadens profit margins is far more flexible when it comes to pricing its services. Clients know that and will start to see the difference when reviewing RFP responses.  

Quite simply, leveraging “new law” now means a firm will solidify its future in an increasingly competitive marketplace for legal services.  

All lawyers use paper, but no firms make their own because of the cost and quality issues of doing so; any other non-core services that a firm performs should be similarly evaluated.