Building Modern Law Firms: Lessons from Leadership
Earlier this year, Demetrio Zema, Founder and Director of Law Squared, spoke with Hearsay the Legal Podcast to interrogate the principles underpinning the structure and operation of Australia's fast growing NewLaw industry.
At the 2018 annual Bar Association Conference, the then-Chief Justice of the New South Wales Supreme Court, Tom Bathurst characterised the existing court system as “an antiquity, ever-evolving but not really radically different from its existence in the 19th century.” Riddled with “old school inefficiencies,” traditional law firms draw similar observations as they remain stagnant against the changing market dynamics. The need to redress the structural inertia within these firms has never been greater as clients find themselves in a buyer’s market and the trend of the “democratisation and commoditisation” of legal services proliferates.
Against this backdrop, the rise of NewLaw firms offers a glimpse into the future of legal practice.
Founder and director of NewLawfirm Law Squared Demetrio Zema joined David Turner on Hearsay the Legal Podcast to discuss the evolution of legal services, how modern law firms can adapt to 21st-century demands with innovative practices and the broader implications for lawyers and clients alike.
Check out episode 65: The Future of the Profession: Building Law Firms for the 21st Century on Hearsay the Legal Podcast now.
Law as a service
NewLaw firms like Law Squared operate on a “law as a service” model. This means that clients are offered fixed-fee and subscription-based pricing as opposed to the traditional time-based billing. “Clients deserve to know what their exposure is going to be," Demetrio states. This approach not only improves client satisfaction but also shifts the perception of lawyers from being mere service providers to strategic partners.
Ensuring cost transparency and shifting the focus from hours worked to the solutions delivered allows more holistic engagement with the client and lays the groundwork for authentic and long-lasting relationships. Law Squared’s approach to client relationships also departs from traditional norms. Instead of relying on individual partners to maintain client ties, the firm adopts a team-based strategy, ensuring that knowledge and relationships are shared across the organisation. This reduces the risk of losing clients when key personnel leave and ensures the firm’s ability to deliver services at a consistent level.
The death of billable hours
One of the most controversial elements of NewLaw is the rejection of billable hours. The conventional law firm model has long relied on billable hours, which often leads to inefficiencies and lawyer burnout. As Demetrio explained, “time-based billing model rewards inefficiencies” as performance and profitability are often tied to billable hours. This breeds incentives for inefficiency, whereby lawyers are rewarded for the time spent rather than the outcomes achieved which results in disenfranchised clients as they face additional unnecessary charges.
Moreover, 60% of lawyers leave private practice within the first ten years, highlighting the need for a more sustainable approach to legal practice to remedy concerns of wellbeing and burnout. Law Squared addresses this issue through the elimination of time-based performance metrics. By encouraging lawyers to focus on delivering value rather than meeting arbitrary billing targets, overall job satisfaction and retention rates are enhanced.
Breaking down hierarchical partner structures
The partnership model, with its Renaissance roots, is a staple of traditional law firms. Yet its hierarchical “up-or-out” system results in a penchant to reward competition over collaboration as individual partner performance and revenue generation are prioritised. This stifles teamwork and creates fissures in team dynamics as partners are often rewarded for their own financial contributions rather than the collective success of the firm. Associates are also pressured to either ascend to partnership or leave the firm, creating a high-stakes environment that contributes to burnout and attrition.
In contrast, modern firms like Law Squared challenge the traditional partnership model by operating as incorporated legal practices with a flat, business-oriented structure. This approach eliminates partner-led silos and enables dynamic, flexible leadership structures that align more effectively with modern business practices. The focus on team-based budgeting and on firm-wide clients rather than individual ownership also nurtures a healthy culture of shared responsibility. The result is not only better outcomes for clients but also a more sustainable and rewarding environment for lawyers.
Technology as a Catalyst for Change
Technology serves as a cornerstone of Law Squared’s success. Whether it be with specialised legal tech solutions such as document automation and workflow management tools or general-purpose software like Microsoft 365, technology has revolutionised the delivery of legal services. Demetrio underscores the value of accessible, everyday tools, stating; “there are great legal technology tools, but there are non-legal tech tools that exist in a very cost-effective framework.”
The COVID-19 pandemic further accelerated this transformation, exposing the limitations of traditional law firms while highlighting the resilience of modern practices like Law Squared. With its pre-existing reliance on cloud-based tools and flexible work arrangements, the firm thrived in a fully digital environment where many others struggled to adapt. Remote work and virtual meetings are now integral to modern legal practice, offering flexibility for both clients and lawyers.
Beyond technology, Law Squared integrates project management methodologies inspired by industries like software engineering, demonstrating the potential for cross-industry learning. These innovations not only streamline operations but also focus on enhancing service delivery, enabling efficient matter management, transparent communication, and a more agile response to client needs. This adaptability has made remote work and virtual meetings an integral part of modern legal practice, providing flexibility for both clients and lawyers alike.
Lessons for Aspiring NewLaw Practitioners
For those considering a leap into NewLaw—whether by starting their own practice or joining an existing one—Demetrio offers this advice:
Develop skills to break down legal work into manageable stages, similar to Agile or KanBan frameworks. Map out project timelines, set clear deliverables, and communicate expectations to clients at every stage. Consider using project management tools like Jira or Trello to track progress efficiently.
Start with accessible tools like Microsoft 365. Avoid overinvesting in specialised tools before ensuring they align with your practice’s needs. Use document automation platforms to eliminate repetitive tasks and explore CRMs for managing client relationships effectively.
Transition from billable hours to fixed or value-based pricing. Break complex matters into stages with granular fixed fees to provide transparency. Regularly update clients on costs and progress to build trust.
Create a work environment that values collaboration over competition. Encourage team-based goals, provide opportunities for professional growth, and promote work-life balance with flexible schedules and remote work options.
If founding a firm, consider an incorporated legal practice model for its flexibility and scalability. This structure supports team-wide accountability and removes partner-driven silos, ensuring better alignment with modern legal service delivery.
By embracing these strategies, aspiring NewLaw practitioners can build thriving firms that meet the evolving needs of both clients and lawyers.
Wrapping Up
The legal profession stands at a crossroads, as traditional models increasingly clash with evolving client expectations and market realities. While Demetrio acknowledges that conventional structures like partnerships and billable hours will continue to have a place, the success of NewLaw firms demonstrates a growing appetite for alternatives among both clients and lawyers.
As former Chief Justice Tom Bathurst’s remarks and the Macquarie Pulse Check reveal, the profession is being reshaped by demands for efficiency, transparency, and innovation. Firms like Law Squared exemplify how adopting NewLaw principles—innovative pricing models, modern technology, and supportive workplace cultures—can redefine the practice of law. By embracing change, prioritising collaboration, and fostering innovation, firms can meet the demands of the 21st century while redefining what it means to practise law.
For law firms seeking to adapt, the message is clear: embrace transformation or risk obsolescence. The future belongs to those willing to innovate.