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Episode 65
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Practice Management and Business Skills
The Future of the Profession: Building Law Firms for the 21st Century
Law as stated: 2 December 2022
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This episode was published and is accurate as at this date.
Demetrio Zema, Founder and Director of Law Squared, interrogates the principles underpinning the structure and operation of Australia's NewLaw industry.
Practice Management and Business Skills| What area(s) of law does this episode consider? | NewLaw ways of working and modern structures for law firms. |
| Why is this topic relevant? | It is an often recited maxim that the legal profession is slow-moving. But being set in traditional ways of working could mean that firms are missing out on clients and revenue, and traditional ideas such as the billable hour and partnership model might mean a law firm is not getting the most out of its employees or serving its clients in the best manner. Such issues may have contributed to the mass migration of lawyers in-house, to becoming sole practitioners, or who are leaving the profession altogether. Some NewLaw models attempt to address some of these problems by introducing new and more modern techniques in the structure and organisation of their firm. |
| What are the main points? |
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| What are the practical takeaways? |
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| Show notes | Bathurst, T. The Role of the Commercial Bar in the Mid-21st Century Macquarie Group, The law firm reimagined Meritas, Australia & New Zealand Wellness Survey 2019 Thomson Reuters, 2022 Australia: State of the Legal Market Report |
| David Turner:
1:00
2:00 | Hello and welcome to Hearsay the Legal Podcast, a CPD podcast that allows Australian lawyers to earn their CPD points on the go and at a time that suits them. I’m your host David Turner. Hearsay the Legal Podcast is proudly supported by Lext Australia. Lext’s mission is to improve user experiences in the law and legal services and Hearsay the Legal Podcast is how we’re improving the experience of CPD. In 2018, the then-Chief Justice of the New South Wales Supreme Court, Tom Bathurst, gave a speech at the Annual Bar Association Conference. The former Chief Justice said that “[t]he existing court system is… an antiquity, ever-evolving but not really radically different from its existence in the 19th century.” Now, if the Chief Justice of the Supreme Court is saying that you know you have a problem. That statement could be made about many of the structures in the legal service industry – the partnership model that’s favored by most law firms, for example, traces its origins back to the Renaissance. The Chief Justice’s point was that the profession is at an inflection point – legal services providers find themselves in a buyer’s market, one in which the buyers have no commercial appetite for what the Chief Justice called “old school inefficiencies.” Reinforcing this assessment, the Macquarie 2020 Legal Industry Pulse Check found “democratisation and commoditisation” of legal services was higher than ever in the years 2017 through 2020, in part driven by the rise of so-called NewLaw firms with a focus on technology and accessibility. The Macquarie Report also noted that legal market was one in which the client is in “greater control than ever before.” With the buyer of legal services in control, how should we build and run law firms for the 21st century? What technologies should we be using to underpin the delivery of our legal services? And how would those practices look for a lawyer working in one? Joining me today to talk about building a modern law firm is founder and director of NewLaw firm Law Squared, Demetrio Zema. Demetrio, welcome to Hearsay the Legal Podcast. |
| Demetrio Zema: | Thanks so much for having me. |
| DT: | Now, tell us a little bit about your background in the law and your career. What brought you to running a NewLaw firm? |
| DZ: | Yeah, great question. So, I graduated from university, did a law and international relations degree in 2010 and at the time didn’t want to be a lawyer. So, I always wanted to be a diplomat and do diplomacy. So, I was fortunate to get an internship in Rome, working for the Australian embassy to the Holy Sea… |
| DT: | Wow. |
| DZ:
3:00 | … at that time and that was a six month internship working with Tim Fisher, who was former Deputy Prime Minister of Australia and then became ambassador to the Holy Sea on behalf of Australia. I did that for six months and decided that I would come back to Australia and hopefully apply for the DFAT program and go through that journey and at the same time probably enroll and do my PLT and see which path it took me on. Unfortunately, I didn’t get through the entire way of the DFAT grad program process, so stayed and finished my PLT and at that point then got a job at an insurance litigation firm and so my career took a very different journey to what I thought it might have been and yeah, six years on in doing largely insurance litigation work, acting for insurers across the spectrum of insurance claims and insurance matters that you could think from motor vehicle damage all the way through to professional indemnity and D&O policy claims. Yeah, I then decided to start my own firm. |
| DT: | Fantastic. You know, I ask all of our guests this question about their career path and I feel like if we all went on the path that we planned in university, there would be a lot of human rights lawyers, a lot of international lawyers. |
| DZ: | Yeah. Everyone gets in there for the right reasons, right? |
| DT: | And almost no commercial lawyers. |
| DZ: | No commercial lawyers. I don’t think anybody ever goes into law school thinking I want to be an M&A lawyer or a strong commercial lawyer. We always often go into that thinking, “well, I want to help people.” Whether it’s legal aid work or whether it’s join the UN and do human rights type work as you were saying. I think that’s the aspirational side of us before we actually get through law school. |
| DT: | Yeah, absolutely. I think sometimes it’s a matter of luck that you manage to find a place in the law that you enjoy. |
| DZ: | Yeah. |
| DT: | In spite of your expectations, really. |
| DZ: | Yeah, absolutely. |
| DT: 4:00 | I certainly never expected that I’d be a commercial lawyer, but I love the work that I do. |
| DZ: | Yeah, of course. |
| DT: | And I think, I imagine we’ll touch on this a bit later, but of course in NewLaw especially, making services more affordable for many clients, you really are helping people just in a different way. TIP: For those of you who don’t already know, NewLaw is a firm business model that diverges from the traditional structures of the legal profession – such as BigLaw. NewLaw doesn’t have a definitive meaning but generally it embraces technology, flexibility for staff, and different pricing models. Really it’s anything that breaks away from the typical way firms are run in search of something different and more efficient, with better outcomes for clients, or just an improvement of quality of life for staff. If it’s new and innovative, it’s probably NewLaw. |
| DT: 5:00 | Now, you founded Law Squared after that experience in commercial law, what inspired you to create the firm? Did you see a gap that you needed to fill or was it something else? |
| DZ:
6:00 | Yeah, I was a pretty disenfranchised lawyer, if I’m honest. I think there was a natural point in most lawyers’ careers at about that kind of 3-4 PQE stage where you feel a little burnt out, you feel a little disenfranchised and you’re a little unsure whether this was what you had really hoped for. Certainly I know that amongst my cohort of university graduates and my friends at the time and upon reflection I can see a lot of us were going through that. In fact, we see a lot of lawyers in the market move often at that 3-4 year point because they’re like, “oh, is this really what I signed up for? Is this really what I want?” And then lawyers move and then again, we see a second wave in the market often around that 5-6 PQE because often they’ve already made one move and at that point they’re like, “this isn’t for me anymore. This isn’t what I wanted” and I think, for me, now having 6 years into the journey of Law Squared, and I reflect on why it is that we exist and we always have said we’re here to change the conversation that people have about lawyers and I think we as lawyers who remain in the profession, have an obligation to support the greater profession, understand why is it that we lose so many lawyers in the profession? Why is it that we have tremendous mental health issues which is just awful. So many lawyers leave the profession, private practice primarily because of budgets, financial pressures, competitiveness within their own teams, let alone within their own firms more broadly and often because of poor behaviour by partners often which can lead to all those big challenges and we see so many lawyers leave private practice. They either go in-house because they think, “well, I don’t have the billable hour. I can have that work life flexibility,” or they just decide to leave altogether. The stats are staggering. 60% of lawyers actually never go through further than 10 years of a legal career journey in private practice. I think that’s remarkable. I think we have an obligation for those who have stayed and those who are building NewLaw firms to think about how we can change that. |
| DT:
7:00 | Well, for so long, the structure of a legal practice lent itself to that attrition, right? There’s no room for a 100% rate of advancement, right? There was some attrition built into the structure. What’s really interesting to me about your answer there is, speaking to a lot of law firm founders, you hear the answer that they saw a gap in terms of the services being offered to the client. That “I thought I could deliver this service more affordably or more reliably, or more predictably” but it sounds like the experience for the lawyers that you work with was the real driver for you founding Law Squared. |
| DZ: | Yeah, absolutely. We always say it’s lawyer led first and then client led second and not because the clients are less important, but because we see a big need to actually fix this big problem in the legal profession. We often say there are three things that we believe in at Law Squared and number one is to change a conversation that people have about lawyers – that overall driving mission. Number two which is very relevant to this point, is to provide lawyers with an environment and culture, which we think is unparalleled to any other law firm. So, at our core, that’s really key driving principle, which is how do we ensure that our operating structure, our firm structure, our engagement with each other and also with our client, ensures that there is that kind of culture led approach as opposed to that very traditional mindset of, yeah, as you say, moving up the hierarchical structure. |
| DT: | And it’s not a trade off either, is it? It’s not a trade off between lawyer welfare or client wellbeing? |
| DZ: | No. No. No. |
| DT: 8:00 | Because I suspect that a lot of the professional indemnity – well, as a former insurance lawyer, you might be able to tell me – a lot of the data about mistakes that happen in law practices is often when someone is working at 3:00 AM… |
| DZ: | Yeah, of course. |
| DT: | … for the seventh day in a row and cultures that don’t allow the admission of mistakes, that don’t allow you to accept learning and growth as a part of your journey as a lawyer, that encourage you to hide mistakes or pad timesheets. All of these things that are deleterious for the client… |
| DZ: | Yep. |
| DT: | … are culture issues, aren’t they? |
| DZ:
9:00 | Absolutely and we have a perfectionism issue, right? As law graduates, we had to be top of the class throughout high school. We had to be top of the class throughout university to then be seen to move into a traditional law firm and be selected for seasonals, articles or graduate program. You always had to be the best and there was never any wiggle room for mediocrity. There was always, well, if you’re an A Grade student over here, or did you have a life and you became a C grade student over here? Well, C grade student, you may have a nice life, but actually you’re not going to get a job at one of the top tier law firms because they will only look at you and your grade. We still even see it now, whereby the first thing that big law firms ask for in graduate programs is your academic transcript. We’ve just launched our graduate program. I don’t want to see a transcript. It’s irrelevant. I think it’s all about the person, what they bring to your business and the experiences that they have, as opposed to whether they were a full A grade student or not and others may say, well, there’s a story to be told in terms of what that person’s journey through their university or otherwise career may have been but actually is that part of the problem that we have in the profession where we’re expecting perfectionism and, like you say, we then end up say top of high school, top in university, we then get into a graduate program. We’re then put on this path and this journey and this trajectory, which is always to better yourself, which is great but it’s also to, often, compete with your fellow contemporaries as you move up that chain, which causes a whole bunch of issues, which no doubt we are both familiar with. |
| DT: | Yes, absolutely and that perfectionism, it’s unattainable because we operate in a complicated and complex system that it’s impossible to know everything about the area in which you practice. You’re always learning which, as you say, is one of the attractions of practicing. |
| DZ: 10:00 | Yeah, definitely. |
| DT: | Now, we mentioned the Macquarie Legal Pulse Check report at the top of the episode, which talked about the democratisation and commoditisation of legal services. What does that mean? |
| DZ:
11:00
12:00 | Yeah, it’s a great question and I suppose it can mean a couple of things and one it’s about how do you dry those inefficiencies and you said before, often when we are speaking to other law firm founders or partners they have created businesses to create efficiencies. There are very strong technology led law firms but essentially they still adopt the same model, the traditional law firm model, which is, the partnership structure, the billable hour and they’re just increasing efficiencies to hopefully make those margins better. We also know that there is a sector of the legal industry which requires high volume, low value work to be done in a more efficient way and we are seeing some of the best advancements in technologies in those areas. So, I think that’s what it alludes to. It doesn’t necessarily allude to the broader changes which are happening by virtue of NewLaw firms or by virtue of client led demand. TIP: Demetrio just explained what the 2020 Macquarie Legal Pulse Check report meant when it mentioned ‘democratisation’ and ‘commoditisation’ but it was also a bit broader than just those two terms. The Pulse Check surveyed 351 firms across Australia about their performance, goals and challenges in August 2019 – so pre-COVID Pandemic. It highlighted some of the opportunities and challenges for law firms, and while it reported an overall increase in revenue across the profession for the year 2019, it also highlighted the struggle to attain and retain staff. From a client perspective, the Pulse Check found that the legal industry was more diverse than ever – with a greater array of options available for those purchasing legal services. As you say, it’s very much a biased market now, and clients are wanting more and looking for more and there aren’t that many alternatives out there and we are now six and a half years old as a business. It’s great to see since that time, just how many NewLaw firms are out there and different iterations and understandings of what NewLaw may mean and be but it’s just another conversation, I suspect and so it’s very much about, well, what are those things that you can drive efficiency of in your business and we think technology needs to be complex, but actually COVID was a really great example when everyone was ordered to work from home on a Thursday and yet a lot of law firms didn’t have laptops. |
| DT: | Yeah. I won’t name the firm, but I do remember hearing that on that Thursday when we were told that we would be going into lockdown and working from home, there was a capability test at one of the large law firms here in Sydney that was not cloud based, did not have the infrastructure for this sort of change and at a third of the capacity of that remote working, I’m sure they were using some kind of virtual machine set up, their entire infrastructure had crashed but your answer about commoditisation is interesting to me because that’s a scary word – ‘commoditisation’. As experts, as professionals, we like to think that what we do is bespoke and unique and highly valuable. |
| DZ: 13:00
14:00 | Yeah, of course. Lawyers are untouchable, we are the bearers of all knowledge and that’s part of issues with our profession. For a very long time where it was, “well, I’m the lawyer, I’m important. You’re the client, you need me. So, you’ll come to my office on my time when I’m available. You’ll sit in my boardroom, overlooking a lovely view and you’ll do that when I say so because you need me. I’m the person with the brain that you need.” Thankfully for advancements in technology and the wonderful thing, the internet, that’s changed. Because it has meant that actually our consumer is informed and so no longer is it, “well, you are the lawyer, holy grail, thank you so much.” Particularly in certain areas of legal practice where actually the consumer is much more informed, the consumer has much more choice and so the buyer of legal services can actually go, “oh, actually no. It’s on my time. It’s when I want it,” and as you say now, it’s very much a buyer’s market. The profession says, “well that’s fine for criminal law, family law, wills and estates but that’s never going to happen in the commercial law” but that’s actually not right. We’ve seen a big change, particularly in that small to medium enterprise type legal work. Again, some great law firms who have really efficient systems, which allow an NDA, a shareholders agreement, a services agreement to be spat out in a matter of seconds and allowing those efficiencies for those small businesses which otherwise would see legal as unattainable. |
| DT: | Yeah and I think that’s the exciting part of commoditisation, isn’t it, is that it’s an opportunity. We see not just in the law but in really every industry and sector that the greatest innovative steps tend to happen at the lowest end of the market. |
| DZ: | Yeah. |
| DT: | Right? At that edge of providing underserved customers who maybe can’t afford the traditional package and commoditisation is happening through these technological advancements that are probably improving the margin on some of that, as you described it, low value, high volume work. |
| DZ: | Yeah and also mean that lawyers aren’t doing work that they’re not excited by. |
| DT: | Yeah, absolutely. |
| DZ:
15:00 | I mean, this is the thing, there’s a certain time in your career where you’re happy to review a number of NDAs and help a client through that point but there is another part of your career where you don’t want to be doing that work because it’s not value adding and so as lawyers, I think the mindset has changed in terms of what value we add to a consumer, no matter where along the spectrum of legal services you may be and it’s much more about value adding, providing expert strategic advice and guidance and it’s not so much anymore about just doing the basic mundane template that you can now download for a very cheap price. |
| DT: | Yeah. This is going back a little bit but in season one of our podcast, I spoke to Simon Bennett, who’s a wills and estates lawyer and he was talking about the difference between the documents that you prepare as wills and estates lawyers and the advice that you provide. |
| DZ: | Yeah. |
| DT: | And that the value is in the advice, not the documents. |
| DZ: | Yeah, of course. |
| DT: | That’s the mechanical or operational way that advice is implemented but what we do that’s really valuable and I think also what we enjoy doing, what we hoped to do, is to give the advice. |
| DZ: | Yeah. |
| DT: | Not write a shareholders agreement for the 1000th time. |
| DZ: | Yeah, absolutely. |
| DT: 16:00 | Now, we also mentioned the former Chief Justice’s speech to the bar conference about old school inefficiencies. Now, as a former barrister, I think I’m allowed to say this myself. If the bar and the bench are saying that there are some old school inefficiencies that clients no longer have an appetite for, then they must be really inefficient and really old school because those are some very slow to adapt parts of our legal profession. I don’t think it’s too controversial to say that. What sort of old school inefficiencies do you think the former Chief Justice was talking about? |
| DZ:
17:00
18:00 | I mean, there’s inefficiencies at all levels, right? There’s inefficiencies at the bench, there’s inefficiencies at the bar, certain inefficiencies in law firms and if we focus on law firms for the moment, the traditional law firm model is built around billable time and partner remuneration models then there are many inefficiencies by virtue of having a leverage model, having a model where there is a distinction between support staff or admin staff and legal staff or fee earners, if you like to use that word, which we hate at Law Squared, and if you look at other inefficiencies, again, back to that comment before around, “well, I’m the lawyer, I’m important, you come to me on my time and in my space,” it’s very different now when we have, again, the power of technology and thanks to COVID. I think COVID has done some tremendous things for the profession more broadly, but the adoption of technology, the adoption of calendar integrations, the adoption of using Teams and Zoom where you can fit a number of meetings back into a day where you can remove the need to send work down the chain and back up the chain and create not only those inefficiencies but also those negative cultural impacts as a result. TIP: In July 2020 Pauline Wright, President of the Law Council of Australia, delivered a speech on this very topic. While firms and practitioners were slower to settle into the so-called ‘new normal’, the courts found almost immediately that embracing technology helped many achieve better access to justice, and called for services to be expanded in that sector. On this particular topic, look out for a future episode of Hearsay: The Legal Podcast featuring Senior Judicial Registrars Brett McGrath and Sharney Jenkinson on some of the changes to the Federal Circuit and Family Court of Australia as a result of COVID-19. How many lawyers have you spoken to and I have spoken to many as well who often say, ” I never see the end. I’m always just a cog in the wheel and I do a certain piece of work and I never actually know what it’s for. My instructions are limited and I do this piece of work, it goes, and I never know what happens.” That all drives inefficiencies because it’s not treated like a project. You get two or three lawyers together and go, “okay, we are buying business X. This is the plan. You’re doing this, you’re doing this, you’re doing this, but let’s have an overview so we all know how we fit in this project and then let’s deliver it together.” Lawyers don’t think like that, and traditional law firm models don’t allow lawyers to go through that process. It’s very much, “I’m the partner, I’ll control it, and this is how it’s going to be directed” and there are lots of inefficiencies that exist as a result and then you can then apply it to court hearings for example. We still start at 10 and finish at 4 and have an hour for lunch in the middle. |
| DT: | Yeah. |
| DZ: | If you’re doing a trial, it takes an hour just for the setup of the process and day one of the trial is pretty much done. There are lots of inefficiencies from a court and judiciary perspective, just in time alone, let alone some of the other challenges I think that exist but I think there are so many inefficiencies in traditional law firms that could and are being addressed by firms like ours which I think will hopefully see a better experience for lawyers more broadly. |
| DT: 19:00 | Let’s talk about the leverage model and that time-based billing model because at Law Squared you describe yourself as a law as a service model. |
| DZ: | Yeah. |
| DT: | Can you tell us what that means? |
| DZ:
20:00 | Yeah we don’t have any time within the business, not as a metric of performance and not as a metric of billing. So, there are no time sheets, no hourly rates, not in any part of the business, and it’s been that way since day one and we’re the only firm that we know of our size – there’s 36 of us – that don’t have any time whatsoever. So, it very much is an outcome based law firm. We have two fee models. One is a fixed fee or a value based billing model, and the other is a legal subscription model. That is largely an in-house counsel support function if you like. So, a lot of the clients we have there are in-house counsel teams who are looking for overflow support or project based support but in an account management way, not in a secondment or placement model way. So, some law firms offer secondees where you’ll put lawyer A into a business on a two day, three day or full time basis for a set daily rate. Our model is not that. Our model is we will allocate a project team or a client team, if you like, across a spectrum of legal services support in our various practice areas. So, access to commercial lawyers, privacy lawyers, IP lawyers, employment lawyers, corporate lawyers all for a fixed monthly rate. So, again, when we look at those inefficiencies that sometimes can be driven by time-based models, is because you’re requiring all those levels of the chain, if you like, from graduate to associate to senior associate to partner to have a participation in driving billing results for the firm. We probably will talk about some of the inefficiencies again that are created by virtue of that model but also why law firms base their entire business model on that. If you think about a revenue model or a budget model for any law firm, it’s always based around the headcount and the multiplier and that’s their revenue target. |
| DT: | Now, the large law firm partners listening to this episode have just done a spit take, they’ve spat their coffee all over their monitors. |
| DZ: | Yeah. |
| DT: | No time based billing at all. |
| DZ: | At all. |
| DT: | No hourly rates at all, whether for charging or measure of performance. |
| DZ: | Correct. |
| DT: | Demetrio, that can’t work. |
| DZ: 21:00 | Yeah. Right. How do you know that that person’s being efficient? How do you know if you’re going to make budget? All those questions and again, it’s because it requires a fundamental shift in the way that the business model is framed and the way the business model operates and it requires a complete move away from thinking that your value is based on the time inputs of what you create. That’s a big move and again, we are the only firm that we know, certainly of our size. I know there are some smaller firms who are doing that, and it’s great to see and I want to see more of it but there is such a big drive from both clients and lawyers that actually time-based building is not a true reflection of the value of the input of what they’re receiving and so how is it that you create a business model, which completely throws that out the window. For us, we say we’re a business that delivers legal services and we very much operate as a business. We have a board, we have a CEO, we have a COO, we have an operations team, we have four legal practice groups if you like. They operate as a business unit and have various roles and responsibilities within that and again, it’s about reframing the very non-traditional way of working to ensure that ultimately you are giving the client what they want. |
| DT: | And so what are your measures of performance for your lawyers? |
| DZ: 22:00 | Yeah. So, our budgets are team based. So, we actually look at the team collectively and look at the various roles, responsibilities, experiences to then determine what that budget is for that team and most of the work that we do is delivered by more than one person because a lot of our clients are ongoing clients and cover various practice groups, then we have a focus on collaboration rather than competition. So, in a traditional model whereby you’re remunerated based on your fees earned and your responsibilities, it’s actually about flipping that model and saying, well, you should be rewarded for having your clients spread across more than one factors group, for example and it’s not about your clients, it’s about a firm client. How do we add more value to that client and create more efficiencies for that client? We are very big on strategy as a business and so our performance measures are very much strategic based rather than financial based. So, we have a firm-wide strategy. Our teams then have individual strategic plans for themselves. There are five teams within the business and then we have individual goal and plans, and they’re each tied to each other. So, our firm strategy is a three year strategy. Our team strategies are reviewed every 120 days and our individual strategy or individual development plans are also reviewed every 120 days. |
| DT: | Wow. |
| DZ: 23:00 | And so again, if we think about the inefficiencies or some may say efficiencies in traditional management of lawyers, then a partner gets a WIP report. It says, “ah, yep. Ross is doing good. Demetrio is doing good. James is not doing so good,” purely based on numbers and it becomes based on performance management, based on financial metrics rather than outcome delivery. To me that’s lazy management because you’re just getting WIP report and you’re having a conversation with somebody based on their WIP deliverables and I’m sure I’m not the only one who has received an email from previous partners saying, “hey, your numbers are down from yesterday. What happened?” That’s not a nice environment to be in. |
| DT: | No. |
| DZ:
24:00 | And how do you take a whole of life approach to the way that you manage somebody? So, each of those three layers of strategy, if you like, very much drive both individual performance and then team performance and then firm performance but again, we don’t look at individual financial metrics at an individual level because we don’t track that and that’s a reason why we don’t do that because different people play different roles and responsibilities and while some may be good client relationship managers, others may be very good workflow managers, others may be very good mentors. It’s taking each of those skills and experiences and bringing those people together to create an outcome focused solution as opposed to just going, “right, I need you to bill 100 grand and that’s your target and that’s your job for the year and whatever you need to do to bill 100 grand, you’ve got to do it.” Very different way of management. |
| DT: | Absolutely. Hearing you describe the structure of the firm and your approach, especially to strategy, multidisciplinary leadership team and interdisciplinary leadership team, strategic plans reviewed four times a year. What you’re describing is really the best practice that would be taught in the top business schools around this country to MBA candidates. That does not sound like a professional services firm, to be frank and I think what it reveals is that you can understand the financial performance of a firm, and now I’m using the term firm in the economic broader sense, without understanding the granular financial performance of each individual “fee earner”… |
| DZ: | Yeah. |
| DT: 25:00 | … if you have a strategy and if you understand your expectations from the firm, again, as a cohort from the start. It’s always interesting to me that we laugh at the history of our profession when we used to bill by folio. |
| DZ: | Yeah. |
| DT: | Right? By page produced. |
| DZ: | Yeah, by weight. This is about 5 grand. |
| DT: | And that created all these bad incentives. It’s the reason why there’s a lot of flowery, unnecessary language in old documents because you’re charging by the length of the document but we have exactly the same incentive structure in many law firms today that promote the less efficient delivery of services over the efficient delivery of services. |
| DZ:
26:00 | Yeah. The time-based billing model rewards inefficiencies. There’s no doubt about that and no one can actually say otherwise, I’m sorry to say, because if you are holding people to account based on financial forms as the first metric because it is the first metric and I don’t know any law firm that doesn’t use that as a first metric, then inevitably people will always strive for that number. You’re always told this story, if you’re sitting there at the end of the day, your target is 60 billable units and it’s 7:30, you want to go home and you’re at 58. Do you sit there and do the additional 12 minutes of work or are there some numbers that get changed? I’m sorry to say, often there are numbers that get changed and it’s the client that is, one, facing the additional charge unnecessarily. Two, the firm feels happy because you met your budget but actually three, you’re like, “I can’t believe I just did that, but actually I want to get out of here and go home to dinner, to my partner.” There are so many inefficiencies as a result of this time-based billing model and clients for a long time have been disenfranchised by that but they’ve never really had an alternative option. |
| DT: | And big principal and agent problems. |
| DZ: | Yeah. |
| DT: | Really, that’s usually invisible. You know, we abhor conflicts of interest as lawyers between our own personal interests and interests of our clients but that’s a fundamental one that we’re always in that sort of model, grappling with our own personal interest in meeting our budget and our obligation to our client to deliver a service to them in the most affordable way. Now, your leadership team or your business leaders, do you have partners? Do you have principals? |
| DZ: 27:00 | Yeah, no. No partners, no principals. Very much an incorporated legal practice and again, business that delivers legal services, so run a corporate model in that respect, having a board, having a CEO or, for lack of better word in traditional terms, a principal partner, which is myself. We have a COO who looks after our strategy and operations team and then we have four legal teams with a whole variety of different experiences and PQE levels within that but again, not that traditional partnership led model or that partner driven financial remuneration model. |
| DT: | Demetrio, again, it can’t work. How do you win the clients over? Who’s going to lunch to bring in that work? |
| DZ:
28:00
29:00 | Yeah, of course and that’s why you have a system that delivers that, right? It’s about “how does a business win its work”? It relies on a whole bunch of different facets. It doesn’t rely on one individual person to hold that relationship and again, we see it every single day. Partner has taken team from firm A to firm B and firm A is now very upset because 10 clients have gone with partner A. It’s again, I think a flawed model and one of the biggest challenges that we have, in that your worth is your balance sheet. Your worth to your firm is because you say, “right, I and my team, we get paid a million bucks. Our revenue is 5 million bucks. Here are our clients. Therefore, I get a bigger piece of the pie at the end of the year.” It’s that posturing, it’s that conflict between existing partners over who has a better balance sheet and inevitably then you have just strong silos, which we see and those strong silos then lead to competitiveness and bad cultures and all those negative things that you see in very traditional law firms. I’m not saying all firms are like this, but there is certainly a tier of firm that is much more renowned for it and that’s where we probably see the biggest moves in the market in the middle because of the way that they are, the way they behave but the way that they’re allowed to behave because that’s the way the business model operates. So, again, it’s how do you take a business based approach to building authentic relationships, to providing clients with what they want and what they’re after and how to better engage with them in a more holistic way as opposed to just being seen as someone or something that is helping build your balance sheet and I’ve had a lot of interesting discussions recently with clients around their disenfranchisement with some of those firms because they very much feel like every dinner and every lunch, it’s actually just because it’s a billable exercise. Interestingly, we had an interview a few weeks ago with a lawyer and he said his light bulb movement was when he said to the partner, “well, you know, I’ve been working on this deal, can I come to lunch?” And the partner said, “well, I don’t think the client wants to be paying for you to come to lunch.” And we can unpack that and work through all the challenges and reasons why but as a lawyer you can see well shouldn’t you as the partner just say, “well, yeah, you should come to lunch, we’re paying anyway” and actually it’s good exposure for you to be in that environment with the client, given you worked on this deal and therefore you also deserve to be remunerated. Instead, it was the client doesn’t want to pay for you to be there. Also knowing that while you are not at lunch, you could be doing other billable work. That’s just one example, I think. |
| DT:
30:00 | I love this idea of the business owning the work, owning those relationships and own the revenue rather than having that very unpredictable, changeable capricious partner-focused client relationships and you do see that that doesn’t produce enduring value for those firms because partners leave, partners bring not only their work, but also their talent with them. I imagine you have a similar approach to relationships with the people who work with you, that they have a loyalty or a relationship w0ith the business rather than with their silo partner. |
| DZ: | Their silo partner. Yeah and again, that’s why we reward collaboration over competition, right? We reward the fact that teams work together on a client or on a subject matter or on something rather than reward those just very silo individual approaches. You know, I also have an approach which is work and life is one thing, you try to work out how to do them both. Gone are the days where you must be sitting in the office from 8-6 just to impress a partner or 8-8 or be online at certain specific times because that’s just when people want to see the little green light on your Teams or anything else. It’s, “how do you truly bring your whole self into your work” and the reality is with mobile phones, we are working every single moment. That’s just a reality. We’re always connected. We have the opportunity to be working and similarly, we should be giving people the opportunity to always be living their lives as well. |
| DT: | Yeah. |
| DZ: | And people will have kids or partners, relationships, pets, home, life, interests, swimming, running, whatever it might be. How do we actually look at a whole of the person approach to the provision of legal services as opposed to the we own you approach. |
| DT: 31:00 | Yeah. Yeah, absolutely. To me, it’s only fair that as part of the new social contract that we’ve signed, that if you’re going to have your emails on you at all times, and you can be checking them at 11:00 PM before you go to bed, that you should be able to put on a load of laundry in the middle of the day. |
| DZ: | Yeah. |
| DT: | Or take the dog for a walk, or you should be able to break up your day into as many granular slices of your work, life, and other as you need to. |
| DZ: | Yeah. |
| DT: | So long as you are delivering outcomes and it seems like the takeaway really is that you’re focused on outcomes, not inputs. |
| DZ:
32:00 | Correct. Yeah and it’s about starting your day and going, “right. The things that I want to achieve today or by the end of this week are X, Y, and Z” as opposed to watching your clock all day, waiting for it to get green. Those traditional matter management systems where you do record your time and both my previous firms used to start on red, you know, and throughout the day, it went to amber and then went to green and there are certain matter management systems that still have that and that’s what you’re chasing and yes, you’re going to get through certain amount of things and certain tasks, but it very much is predicated on the basis that you get to green, hopefully by the end of the day or by the end of the month. It’s disjointed as a result. TIP: The Meritas Australia and New Zealand Wellness Survey 2019 looked into just how much time staff in law firms are spending at work. Though just over 50% spent 35-45 hours working a week, around 20% spent 45-55 and some even upwards of 60 hours a week. In what seems almost like a contradiction 96% reported having a manageable workload – so where are all those extra hours coming from? When participants were asked if their contribution to the firm is assessed significantly based on how many hours they spend in the office, 39% said it was and a further 26% say “probably”. |
| DT:
33:00 | Do you think there’s ever a place for the billable hour? I get the feeling I know what the answer’s going to be but it’s still such a ubiquitous measure either of time or of performance. I know that there are many firms which like Law Squared will tout themselves as we are a fixed fee firm, but will nevertheless use the paradigm of billable hours to measure the effectiveness of the fixed fee. So “we’ll look at the billable hour as an opportunity cost against the fixed fee…“ |
| DZ: | Yeah. |
| DT: | “Well, if we’d charge this on a time base…” |
| DZ: | On a time base, yeah. |
| DT: | We would’ve lost money.“ |
| DZ: | So, therefore, it’s not profitable. So, just to go to that direct point there, the problem with a firm offering fixed fee and then measuring time, is that the base in which they’re measuring time is based on an arbitrary figure of an hourly rate and the arbitrary figure of an hourly rate is dependent on what multiple the firm wants to make on its lawyers. |
| DT: | Yes. |
| DZ:
34:00 | So, is it 3x or 3.5x or 4x or is it 5x? And that itself is arbitrary and so by virtue of it, it becomes an arbitrary figure the whole way down the chain. So, that’s the first point. The second “is there a place for billable time”? Yeah, there is. Is there a place for traditional law firms? Yeah, there is. Is there a place for big law firms? Absolutely. I’ve never said that this is the only way forward and this is a true path but I am a big believer in offering choice and alternatives and ensuring that clients have choice and alternatives and really it’s only been the last five or so years where clients are starting to have choice around where they can direct their legal spend, particularly in the, say, commercial corporate space and even in other areas, in criminal, in employment, in wills and estates, because you have all these NewLaw firms, loosely categorised, in terms of what they can now offer away from your suburban firms or your traditional law firms that happen to be in Sydney or Melbourne or anywhere else. There are also some clients who just want the billable hour and that’s okay. That’s totally fine. There are procurement teams who just want the billable hour because it’s easy for them to compare three law firms based on billable hours and that’s fine. Again, there’s no right or wrong answer because it needs to be about what the client wants but also then on the other side, lawyers need to have the option about what environment they want to engage in as well and I think we are seeing a shift certainly from those client led procurement teams tenders, for example, who are now inviting “innovative”, using quotation marks, pricing models. What else can you offer us that is not the billable hour? And again, that’s a recent development, I think, but you know, is the billable hour dead? Nope. Some firms will continue that path. Totally fine, but there are now alternatives in the market, which is exciting |
| DT: 35:00 | A lot of lawyers will say, “I would love to use fixed fees. I totally buy into the philosophy of value-based pricing but the work I do is so bespoke, it’s unpredictable. I don’t know what it’s going to cost at the outset. I can give a range, but it’s so special, so unique that I couldn’t possibly predict a fixed fee. I’d lose so much money if I got it wrong.“ |
| DZ: | Yeah. |
| DT: | What are some of the techniques that you can use to bring value based pricing into bespoke complex work? |
| DZ:
36:00 | Again, back to that project management approach that I talked about before. How do you actively project management any piece of work that you’re doing in order to deliver and derive value for the client and be transparent about your fees along the stages? And one thing we’re not very good at as lawyers is we say, “ah, this is going to be about 50 to 60 grand” and then all of a sudden the client gets a bill for 100 at the end of the deal or the litigation, whatever it might be and no one has stopped along the way to actually break it down into pieces in terms of “if we get to stage one, it’s going to be X. If we get to stage two, it’s going to be X. Stage three, there may be a fork this way, may be a fork that way. If it forks this way, it’s going to be X. If it forks that way, it’s going to be Y” and again, how do we take that project management approach, which lawyers, again, are not very good at? The reason why we’re not good at it is because the business model fundamentally doesn’t allow it, right and so when you are always going to be held accountable based on financial metrics related to time, then you need to rethink the way that you are then actually scoping out your work. If I spend three or four hours scoping out a project, the lawyer will say, well, where does that time go? Where am I putting that down to say, “well, it’s taking me two hours to project manage this.” Well, if you project manage it right, then you’ll make the money at the end. You’re not going to make the money on logging two hours but again, the system doesn’t allow them to do that and so there is often a band of lawyer who says, “oh, that makes sense” but there’s that equity structure, which says, “well, that may make sense but actually that’s not what we bought into and so we’re not going to change that model.” Fundamentally requires a business model shift in the way that law firms operate and run. Some are interested in that path, some will dismiss that path. Again, that’s totally fine but what we have now is options in the market. |
| DT: 37:00 | It sounds like what you’re describing is breaking down the single monolithic fixed fee into a set of more granular fixed fees that in a complex or bespoke matter, you can use to demonstrate that you are providing value and you can use to ensure that you are hedging against the risk that you’ve got that single monolithic fixed fee completely wrong. I’m thinking about the kind of a la carte pricing that we see increasingly in the US in litigation firms but regrettably not so much here, where there are fixed fees for events in litigation. That doesn’t mean that there is a single fee for the entire three years of litigation that will go ahead. But that it’s based on how many interlocutory motions there are… |
| DZ: | Correct, yeah. |
| DT: | … how many witnesses need to be, in that jurisdiction, deposed, those sorts of things. |
| DZ: | Yeah and I mean, our litigation team, from what I know, the only firm of our size that have a fixed fee litigation practice and that’s across general commercial litigation, debt recovery through to insolvency and again, because we have taken that approach, you know, take the lessons from other industries and go, okay, well if you break it down and you offer client an idea about that spectrum of legal costs as opposed to going, “oh, this is really high. Oh, there may be lots of applications. Oh, we don’t know what an application’s going to cost us.” You have an idea. |
| DT: 38:00 | Yeah. |
| DZ: | And the client deserves to know what their exposure is going to be and some people listening may come from very big law firms say “our clients just don’t care”. They might not have cared in the past but they’re starting to care and they will care in the future and so law firms need to start being reactive in terms of the way that they are billing, the way that they are forecasting, because no longer is it just accepted to sign and pay. |
| DT: | And also, you don’t know the clients who do care that you’re missing out on because I imagine, and it’d be interesting to hear an example from you about this, that because your marketing and developing your business in a way that’s not focused on that partner relationship in the prime role, clients are coming to you because of those differentiating factors and sure, maybe the clients whom you’re winning because the partner knows them well personally or knows them for many years of working for them… |
| DZ: | Long relationships. |
| DT: 39:00 | … don’t care about the billable hour, many of those organisations that are looking for a provider who you might not have a relationship with right now are looking for those sorts of services. |
| DZ:
40:00 | Yeah, absolutely and again, big law firms say, “well, we’ve had this client for a long time, they’re never going to leave us.” That’s fine but a client may be giving you 80% of its work and 20% somewhere else, and they may be saying “actually, of this 80% we’re going to start giving 5% away to somebody else to just test what happens because we’re overly happy with this level of work” and so then it might come to a firm like Law Squared or like yours or somewhere else and then all of a sudden it says, “okay, well actually we’re going to take 10% of that” and so what was 80 has now become 70. They’re like, “well, actually, we’re going to take 15% of that” and so slowly, what was 80% going to one law firm then becomes 40%, slowly becomes 20% and that’s I think when we’re going to start seeing some greater change within the profession because actually clients are saying “where I used to just have one or two providers, actually I’m going to change the way that I give legal work out from a panel perspective or from a client engagement perspective because I know that actually there are super complex, highly regulated, specialised work that I want to send to a top tier law firm and that’s probably 20 or 30% of my legal budget, but there’s probably 70% of my legal budget that I feel like doesn’t need to go there and then what are the options in the market as a result of that?” I think that’s where there is opportunity for smaller firms and even some solo firms, you know, solo individuals who are really good specialists and they just want to work for themselves. They’ve left big law firms and they say, “I just want to be really good and be known for doing really complex X, whatever it might be.“ |
| DT: | Yeah. |
| DZ: | We’re seeing big businesses use very small law firms and sometimes a one person solo practitioner for that advice and I think, again, that’s quite a new shift that we’ve probably seen in the last five years that we haven’t seen before. |
| DT: | And we’ll talk in a minute about some of the levelers that small firms or even sole practitioners can use to deliver services at the scale or with the rapidity that, previously might have needed an army of graduates and paralegals to do. Before we do that, you mentioned Law Squared is an incorporated legal practice. |
| DZ: | Yep. |
| DT: | Incorporated legal practices have been around since 2001. When I last checked, there’s a little over 3000 of them in New South Wales at least. |
| DZ: | Wow. |
| DT: 41:00 | There’s just under 7,000 practices in New South Wales, so they now make up a substantial proportion of practices, but still a minority. |
| DZ: | Yeah. |
| DT: | What is the benefit of an incorporated legal practice that you’ve seen, I suppose, for you at Law Squared, and what does it allow you to do that a partnership doesn’t? |
| DZ: | Yeah, there’s a couple of questions there. The first one, what it has done for us has allowed us to build out a business that delivers legal services. The partnership model, again, rewards the owners in the model whereby they are competing against each other and it therefore assumes that lawyers want to become owners, right? |
| DT: | Yeah. |
| DZ: | We haven’t even got down that part yet. In terms of, the hierarchy suggests as you go up the chain that you want to become a manager, you want to become a leader, you want to become a mentor, and you want to become a business owner. That’s what the hierarchy suggests. In fact, it requires of you to stay up the chain. |
| DT: | Well, and the reverse is true. |
| DZ: | Yeah. |
| DT: | It also says that the expert path, the path of greater technical proficiency is the path to business leadership. |
| DZ: 42:00 | Yeah, correct and which we know from being in those firms ourselves, that actually they often make the poorest leaders, the poorest mentors and the poorest colleagues because they’re just very good technical lawyers. So, that’s one example. I think we’re also seeing tax benefits. So, you now have solo practitioners who are registering incorporated legal practices, one director, one shareholder doing just work themselves from a tax perspective and they’re contracting in and out as a result. So, traditionally where you would just have a solo practitioner register under an ABN, for example, similar to what the bar do, you don’t have that anymore. I think certainly a lot of sole practitioners that I have seen and spoken to as they go through jumping out of their law firm, they go through an incorporation model as opposed to just sole practitioner. Yeah. So, I’d be interested at about 3000, how many of them are more than one or two people? And I suspect there’s very few. |
| DT: | It’s interesting you say that the vast majority are sole practitioners. |
| DZ: | Yeah and that’s a tax benefit… |
| DT: | Yeah, absolutely. |
| DZ: | … often, yeah, and they then run a micro business and I think it’s a good thing, I’m surprised the bar haven’t started calling for it as well. |
| DT: 43:00 | One of the benefits of an ILP is that more radical approach to sharing the benefits or the profits of the firm. In a partnership, the equity partners share in the profits, in a corporation, you can issue shares at a very granular level to all sorts of employees. You can issue ESOP shares and provide those incentives that are tied to the business success as well in a way that you can’t really do with partnerships. I know you can provide bonuses and you can provide financial incentives in a non-ownership sort of way, but an ILP is really uniquely placed to do that. |
| DZ: | Yeah, I think it is but again, that assumes people want ownership. |
| DT: | That’s true. Yeah. |
| DZ:
44:00 | And again, we think, we find most lawyers actually don’t want ownership and don’t want responsibility. What they want is they want certainty and they want responsibility in their jobs and they want the opportunity to do more. I think one of the challenges we see in very traditional law firms is that lawyers just need to be lawyers. They don’t get the opportunity to do more. I think one of the great things about being in a firm like Law Squared or similar, you get the opportunity to be more than just a lawyer and that’s one of the key drivers, I think, and again, as lawyers, we’re risk adverse and as lawyers, we are now starting to be a bit more transient than we used to be. Certainly when I became a graduate, it was expected that the firm you started at was the firm that you finished at. You became part of the furniture and that was expected. Now, that’s not true. You see people move every 2, 3, 4, 5 years and that’s okay and I think trying to incentivise people by tying them into ownership in some form, no matter what it looks like, I think is also not necessarily the right way. |
| DT: | You mentioned the opportunity to do more as a lawyer being a really attractive feature to the lawyers at Law Squared, is what you’re describing there, what’s sometimes been described in the literature as the T-shaped lawyer, that deep expertise in legal knowledge, but that broader, although comparatively more shallow expertise across design, project management, leadership, technology, Is that what you’re describing? |
| DZ:
45:00 | Yeah. For me it’s about obviously again, we’ve spoken about how strategy is such a core part of our function as a business and we require our lawyers to be part of that strategy and building strategy and want to be more than just lawyers. If you think about the growth that we’ve had over the last few years, it’s required a team of people with some legal knowledge and without legal knowledge to come together to achieve an outcome. That’s more than just sitting here writing a shareholders agreement or finalising a deal or doing a general protections claim, it requires people to have a more well-rounded approach. It’s not quite the T-shaped lawyer. I think it’s actually a bit deeper than that but yeah, follows that similar philosophy. TIP: T-shaped leadership or not, it seems like Australian practitioners don’t have a lot of faith in their leaders. According to Thomson Reuters 2022 report on the state of Australia’s legal market; only 38% of Australian lawyers report high satisfaction with leadership, and 34% with business direction, a fair bit lower than the global averages of 52% and 47% respectively. |
| DT: | Now, we’ve been alluding to this all episode. Let’s talk about tech. |
| DZ: | Yep. |
| DT: 46:00 | We’ve talked about document automation, that beneficial commoditisation at the lower end of legal services and how that can be a leveler for the sole practitioner, for the small firm in competing for the sort of work that was once the exclusive province of the big law firms. What sort of technology are you using at Law Squared and what do you think is the kind of basic level of tech literacy that’s needed in the profession? |
| DZ: | Yeah. Well, I think our generation of lawyers is very tech proficient. There is a generation above us that is probably tech resistant and there’s a generation above that is… |
| DT: | Allergic. |
| DZ:
47:00 | Yeah, maybe allergic is the right word and so the tech being efficient is one, as opposed to the tech being inefficient. For us, again, most of those traditional legal document management models are built around time recording frameworks, right? And so no matter which one you look at, they all will show you the functionality of how it can work behind the end and capture the time, allow you to generate great reports around time and very little focus on traditional CRM models, lead management, proposal management, matter management, contract management and invoice management for that matter. I think a lot of the smaller firms that I get to speak with every day aren’t using legal software management at all. They’re just using everyday tech. They’re using Microsoft Office 365 and all those capabilities, as opposed to just using Word, PowerPoint, Excel, actively using SharePoint as a matter management, actively using Forms as a way of intake, actively using workflow automations within Microsoft. |
| DT: | This is quite freeing really. I mean, I think a lot of people think of legal tech as being very exclusive, a very specialist area of technological expertise. You really need to know all about this sector and the specialist tools made for us lawyers. |
| DZ: | Yeah, of course, because lawyers buy from lawyers because other lawyers understand our pain points but again, most people who leave traditional law firms leave because they’re disenfranchised and leave because they see opportunity elsewhere and lead because they don’t want to buy into a practice. Again, there are so many just everyday tools that exist. Typeform is a great example of people using Typeform for, again, intake or inquiries or even automation. You could do a workflow from Typeform into Word if you wanted to. |
| DT: | Yeah. |
| DZ: 48:00 | You could go back to old school Excel and put in cell fields in Excel to pump out into Microsoft Word. Mind you, there are great legal technology tools and lots of them are friends of ours but there is, for the everyday punter who just wants to start up a practice by themselves, non-legal tech tools that exist in a very cost effective framework and again, Microsoft 365 is a perfect example. |
| DT: | This is a bit of an aside, but there is a bit of a convergence in the kind of off the shelf cloud-based SAS tools in the market, isn’t there? I remember I received recently an email from a government department. It was a MailChimp mailout with a link to a Typeform survey and I thought, “wow, this is exactly the same thing we’re using at Hearsay. It’s the same stuff we’re using at Lext.” Everyone’s just using these tools. |
| DZ: | They’re just tools that make your business efficient. They’re not legal tools but the market likes to buy from lawyers because lawyers again, have a resonance of what they think is important, and they feel that their pain points are unique, like my area of practice is very specialised and very difficult to predict what the cost may be, where actually you can use everyday really positive tools and even from a time tracking perspective, I mean there are many solo practitioners that I know that are using time-based billing, which is fine but they’re using almost design or architecture firm software, you know, they’re not using legal software. Yeah. Super interesting. There are lots of other industries that we can learn from as lawyers. |
| DT: 49:00 | Absolutely. It’s interesting hearing you describe using software tools from other industries in a law practice because that changes the way you think about how you work. One thing I can think of there, is that if you are using software that doesn’t allow you to record time, very quickly you’re going to stop thinking about the value of your work in terms of time… |
| DZ: | Yeah. |
| DT: | … because you’re just no longer measuring that as a metric. Something else that I’ve started doing recently is using tools from the software engineering industry in legal practice. Sort of the tools that Atlassian publishes, for example, like Jira that are project management tools for that industry. What sort of techniques do you think we can learn from industries like the software industry, like architecture, like design that inform how we can work better for our clients? |
| DZ:
50:00 | Yeah. I think there’s two key things that we can take and that’s not even technology specific. It’s just actually the way those industries operate much better than how we do as law firms. Collaboration is key and the way to do that is to have really good project management frameworks within the business. Actually looking at a new client or a new opportunity to come to the business and project managing that out. It’s one thing that all of those other industries do very well. Software engineers do it perfectly. What are we trying to achieve? What is everyone’s part of this? What does it all look like and what do we need to do to get there? Taking that project management approach and simple things like, again, software engineers and certainly tech companies love this in terms of a daily huddle and what does a daily huddle mean? And not suggesting that firms need to adopt this, but take those principles, which is not a weekly WIP meeting. Okay. How much have you got on? What’s your capacity? When will you have free capacity? That’s what our traditional, weekly WIP meetings used to be like, certainly in firms that I’ve been at, as opposed to having a daily, like, right, what is it that you need to achieve? Who do you need help from and how can we get there as a team to get you to achieve your objective by the end of the day? That’s something that I know a lot of technology companies do every single day. It’s a 10 minute stand up as a team. What is the goals for the day? How are we going to get there? How do we go with yesterday’s goals? What do you need help with? Go from there. Again, non-traditional ways of working from a law perspective or from a professional services perspective and taking what those industries offer around collaboration and working together. Just not something that lawyers are very good at. |
| DT: 51:00 | We’ve talked about project management a couple of times in this episode. What sort of project management frameworks do you use? For example, do you use Agile? |
| DZ:
52:00 | Yeah, I think Agile is probably the way of working but we have just a framework that we have built out which allows each of our lawyers to develop project management skills. TIP: We’ve just mentioned Agile. For those of you who haven’t heard the term before, Agile is a project management style initially conceptualised for software development. It has many different variations with its principles adapted for individual projects, after all, it’s meant to be agile. But there are recurring themes: focusing on the needs of clients, adapting to changing requirements, optimizing workflow to minimize time spent and measuring progress by outcomes. The idea is the project is managed iteratively with each evolution of the project improving on the last – attempting to make the final outcome the best it can be. I think that’s a really important part of our journey, which is looking at things holistically rather than as lawyers traditionally do, very narrow mindedly. Again, as lawyers we like to think that we are very important but often we need to add value and our strategic insight to a business, particularly if we’re in the commercial corporate law space, which we are. It’s “how do you help a business achieve that”? And we’ve got to be better at project managing, planning, supporting and not being seen as those people who over-complicate things. People don’t like lawyers, right? They’re seeing lawyers as the handbrake to happiness. |
| DT: | The department of no. |
| DZ: | Yeah. Department of no, department of reading and writing. Marketing don’t want to send something to legal because it’s going to take forever or it’s going to get shafted. We never really understand our customer. It’s because we’re not taught, I think but also, we have this assumed knowledge. Well, “you’ve got a black letter of the law” – understand, apply accordingly – as opposed to helping the consumer, the client, the business unit actually, “how you can help them achieve their objectives”. That’s our job every single day, no matter where along the spectrum, whether it’s wills and estate, whether it’s criminal, whether it’s early stage startup company who wants to incorporate or whether it’s a company that wants to IPO. Our job is to help them achieve that and that’s the way we should be looking at it. |
| DT: 53:00 | And I think that’s totally consistent with, you know, you and I said at the start of this episode, the vision that you have of yourself as a lawyer in law school is often very different to the one that you find yourself in as a professional but that idea of being an enabler, of being someone who says ‘yes and…’ rather than ‘no because…’ is absolutely consistent with our obligation to the administration of justice. I think if we are enablers, if we guide rather than block, we’re influencing the path of business in a way that’s consistent with the law, in a way that’s consistent with how we would like to see business operate… |
| DZ: | Yeah, absolutely. |
| DT: | … because the alternative is marketing doesn’t go to you. Marketing doesn’t ask anymore. |
| DZ: | Absolutely. They just go around you. |
| DT: 54:00 | Exactly. I remember, this is many years ago when I was involved in New South Wales Young Lawyers, I heard a speech by Stephen Gageler, the High Court justice and he said there are two professions that a functioning civil society absolutely needs, and it’s plumbers and lawyers. He was talking about the benefits of what lawyers deliver, not in human rights or crime, although those are, of course, very admirable parts of the profession but in commerce as the enablers of an efficient and functioning commercial landscape, as the enablers of an efficient and functioning market and that really changed the way I thought about my job as a commercial lawyer, as a pro-social sort of job. Little off track there but I was just reminded of that conversation and I should say unpaid plug for Atlassian, but a tool like Jira is a fantastic project management tool. If you’re using Agile you can create your KanBan cards and of course convert them into a Gantt chart. It’s a great tool. |
| DZ: | Look at burndowns, all those wonderful things that you can use. |
| DT:
55:00
56:00 | Yeah, absolutely. We’ll include in the show notes to this episode, a few different project management frameworks and intros to things like Agile and KanBan that you can use to start managing your matters as projects. TIP: We’ve mentioned these programs a couple of times now, so let’s explain them for anyone that’s interested. Atlassian is a company that designs workflow assistance programs that can be used in many different sectors and industries. Jira is a series of products that help out with things like scheduling, delegation and progress tracking. One such program is Jira Software, which is designed for the Agile management system. Last but not least, KanBan is a project visualization methodology – which Jira has a template for all ready to go. A Gantt chart is a way of measuring the progress of a project over time. It allocates start and end dates for steps, indicates the order things need to be completed in, or if they can be completed in parallel. Tasks can be assigned to individuals and everything can be broken down in stages. Progress for each task is kept track of through the duration of the project. An explanation is probably less helpful than a visualisation, if you have Excel or Google Sheets there’s a template there you can look up to get a better idea. It’s not exclusive to the programs mentioned above, but can be used in conjunction. We’re just about out of time today, Demetrio, and there’s something you said at the top of the episode that I’ve been thinking about. You said there are a whole proliferation of law firms just starting now, sole practices or small firms that are implementing their idea of NewLaw and we hear this term all the time. |
| DZ: | Yeah. |
| DT: | And I think a lot of people lay claim to it as well. There’s a lot of firms that claim to be NewLaw firms and it’s certainly a term that law practices aspire to, I’d say that’s definitely the case but there doesn’t seem to be much of a consensus on its meaning. What does NewLaw mean to you? |
| DZ:
57:00
58:00 | Yeah, it’s a great question and it’s one that is often, like you say, thrown around and, we have big law firms or even big consultancy firms who now have NewLaw departments and that in itself calls into question the integrity of the meaning of the word when it was first coined. To me NewLaw is a fundamental business model shift in the way that legal services are delivered and it requires a change in the way that the law firm is structured. That’s to me what it is and so it could be leveraged technology, it could be throwing out billable time, it could be having different ways of working but I think it’s now almost lost its meaning because everybody has some form of NewLaw as a category or as a practice group as opposed to a way of working or a way of existing. For us, I think, and possibly a little bit selfishly, but I think we embody all those true elements of what a NewLaw firm is meant to be. It has thrown out the foundational structures of a traditional law firm model and it still focuses on service delivery in that human to human way, but leveraging technology and leveraging other industries insights, such as project management and fixed fee pricing and all those kind of things, to deliver an end outcome for a client. I think to me, that’s what it stands for and there are other examples of that, which is great to see, and I hope they become more examples of that because if we go back to probably one of my very first comments in this interview around, how do we change the profession? How do we change the conversation that people have about lawyers? And that is our number one mission as a law firm but we can’t do that alone. We need other law firms to exist like us, to look like us and sound like us and some of them may say, “well then you’re taking market share.” Great, I want more of us to take market share because ultimately if we can steer away from there only being one traditional path for being a lawyer, if we can keep more lawyers in the profession, if we can create an environment whereby we have people who are not disenfranchised at 3 and 6 and 10 PQE and then leave the profession, then we’re all doing our job, I think, and so I have supported and mentored many other lawyers in starting their own practices and hope they do that for the right reasons, which is, yes, sometimes they want financial gain, but actually they were so disenfranchised themselves they want to create an environment for others to be part of and I’m a big believer of creating this kind of new bucket, if you like, of law firms that actually here for greater good. Yes, greater good for client service and client outcome, but you can only get that by having a really positive lawyer experience and a lawyer culture. I think that needs to be fundamental for us moving forward. |
| DT: | Well, hopefully some of our listeners to this episode will take up that call to arms. |
| DZ: | Hope so. |
| DT: | Demetrio Zema, thanks so much for joining me on Hearsay. |
| DZ: 59:00 | That’s alright. Thanks for having me. Appreciate it. |
| Ross Davis:
1:00:00 | As always, you’ve been listening to Hearsay the Legal Podcast. I’d like to thank our guest today, Demetrio Zema, the founder of LawSquared, for coming on the show. If you listened to this episode and liked it, you might like an episode that we have coming out very soon with David Bushby, the founder of Law Hackers. He will talk about introducing technology into law firms. If you want more legal tech content now, check out episode 22 with Wenee Yap for her story about how she got into legal tech. If you’re an Australian legal practitioner, you can claim one Continuing Professional Development point for listening to this episode. As you well know, whether an activity entitles you to claim a CPD unit is self assessed, but we suggest this episode entitles you to claim a practice management and business skills point. More information on claiming and tracking your points through Hearsay can be found on our website. We all love CPD and we have some more amazing guests and episodes coming up in season 3 of Hearsay but did you know that we also have a completely free podcast as well? It’s called the Hearsay: Sidebar and it’s 20-30 minutes where the Hearsay team gathers around the microphone to talk about the legal side of what’s in the news. So, have a listen when you get a chance and if you feel like leaving us a rating and following the new show, that’d be awesome too. Hearsay the Legal Podcast is brought to you as always by Lext Australia, a legal innovation company that makes the law easier to access and easier to practice and that includes your CPD. I’d like to ask you a favour. If you like Hearsay the Legal Podcast, please leave us a Google review. It really helps us out. Thanks for listening and we’ll see you on the next episode of Hearsay. |
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