Editor’s note: This is the third installment in a series examining the shift in law firm business models and the issues law firms must address to remain competitive in a new age of providing legal services.
Dilworth Paxson, long seen as a very traditional regional law firm, was probably not on anyone’s list of the most innovative law firms just two years ago. But it’s now a place that has an outside board of advisers, an investment fund, and is gutting one of its floors so startups and entrepreneurs can interact.
According to LawVision Group consultant Marcie Borgal Shunk — in addition to specialization, smaller partnership classes and new compensation structures — in the future there will be greater diversity in law firm models.
“There is room for multiple models, each of which will be tailored to serving the needs of their specific target clients/practices/etc.,” Ms. Shunk wrote in an email.
Dilworth Paxson, a 110-lawyer, 82-year-old firm, signaled it wanted to change perceptions when it hired the former head of Reed Smith’s business practice, Ajay Raju, in January 2014 as the firm’s executive chairman and CEO.
And in just over a year, Mr. Raju has taken his focus on innovation to a new level in the law firm world, forming an outside board of advisers to the firm composed of business and legal leaders, and building space in Dilworth Paxson’s Philadelphia offices to house an exchange where investors and entrepreneurs can meet with the goal of directing more business to the region.
In a sign of his commitment to the concept, Mr. Raju is moving his office and legal team to that space reserved for the Dilworth Innovation Lab to be in the midst of what he said he hopes will be the watering hole that draws industry to Philadelphia. The lab will focus on two industry segments: biotech/life sciences and technology.
Mr. Raju is so confident in his plan that he got his partners to go in with him in creating an investment fund, Dilworth Ventures, open to the firm and outsiders to invest in the lab’s most promising startups, as well as other opportunities.
The legal industry has largely eschewed innovation and most lawyers don’t offer the breadth of services of a counselor, Mr. Raju said. But they need to start quickly. After all, he asked, what other than a law firm has the breadth of business, political, philanthropic, global and local connections?
And it will be those business relationships that law firms will have to leverage moving forward.
“What are law firms going to look like in five years?” asked David Gaulin, co-chair of PricewaterhouseCoopers Law Firm Services. “I think they will have some more professional resources embedded within to help identify” what the client needs. And that goes beyond the general counsel and the organization’s legal needs, he said.
“To be relevant, the law firm needs to be a consultant,” Mr. Gaulin said.
And having a better understanding of the client’s business means bringing more business-minded people into the law firm, said Timothy Corcoran of Corcoran Consulting Group.
And leaders of law firms who have that business-savvy and proven leadership capability will begin to move into top leadership roles at other firms, he said.
Focusing on business practices has shown to be a natural first step for law firms looking to show their business acumen to clients.
Perkins Coie runs the website www.startupPerColator.com, which aims to advise entrepreneurs on how to form a company, create a business plan and get funding. Last year, Cooley LLP launched Cooley GO, a microsite for entrepreneurs that provides free legal and business information, among other things. Orrick, Herrington & Sutcliffe has also created a startup took kit for entrepreneurs.
And DLA Piper, another firm known for bringing in outsiders for leadership roles, has created a corporate advisory arm called Noble Street. The group will focus on financing, corporate and M&A activities in the media, entertainment, technology and sports sectors. The goal of the group is to find and create opportunities for the firm’s clients in an area facing a chronic shortage of capital.
Gina Passarella can be contacted at 1-215-557-2494 or at firstname.lastname@example.org. Hank Grezlak can be contacted at 1-215-557-2486 or at email@example.com.
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