Alternative providers of legal services have released a scathing attack on traditional firms, claiming that their hold on the legal market is slipping as alternative providers roll out superior business models
Managing director of alternative firm Plexus, Andrew Mellett, told Australasian Lawyer of his belief that despite the vast majority of Australian legal work still being undertaken by traditional firms, overseas trends indicated that the demand for local alternative providers would keep increasing.
In a survey conducted by the Commonwealth Bank and Beaton Research + Consulting, one quarter of large law firms said that they had competed with alternative business model firms in the past 12 months showing that they were already resonating with clients in Australia.
“The thing alternative firms have in common is that they recognise the historical model is broken, and that they are looking for different ways to add value,” Mellett told Australasian Lawyer.
Mellett believes that traditional firms are hamstrung by their cultural and structural baggage, which makes it very hard for them to adopt new models.
“There is no doubt there is a dramatic and persistent shift in the legal industry to focus on value and our whole mission is centred on it. We don’t have partners and we strip out a lot of other overheads,” Mellett said.
General manager of alternative legal service provider Bespokelaw, Simon Kahil, agreed that, in his view, the key point of difference between traditional and alternative firms was simple: alternative providers could offer better value for money.
“The legal profession is an industry that has been operating in its current state for many, many generations,” Kahil said.
“Meanwhile every other industry has been subject to disruptive influences and has responded to price and revenue pressures.”
Both Kahil and Mellett said that non time-based pricing was another key differential point of alternative providers.
“We will never bill by the hour. We are highly critical of that format because it misaligns lawyers and their clients,” Kahil said.
“The client wants something settled rapidly at a cost which they are aware of. We fundamentally disagree that billing by time reflects the value of the work done.”
Mellett said that billable hour was an anachronism, but also said that some customers and lawyers still preferred the hourly fee arrangement.