Updated: Feb 5, 2020
Much has been written about the advantages of the NewLaw model. Essentially, the advantages for attorneys are more freedom and a better work-life balance. For clients, the NewLaw model offers them alternative pricing, giving them substantial costs savings.
We spoke with Lesley Hobbs, founder and CEO of Cognatio Law, the latest NewLaw firm in Hong Kong on whether these advantages help level the playing field for female lawyers, what lawyers should expect when thinking about transitioning from traditional to the NewLaw model and the challenges for NewLaw firms doing business in Asia.
Conventus Leadership - Has the NewLaw model freed female lawyers from the ingrained gender issues in the more traditional law firm models?
Lesley Hobbs - In general, under the NewLaw business model, men and women operate on a level playing field both pay and opportunity wise. I have not observed any gender discrimination issues for female lawyers working within/under the NewLaw model. Clients just want the best and most cost effective solution. NewLaw certainly doesn’t solve though the underlying gender inequality issues women face overall within the legal profession. For instance, there are currently (and have for a number of years) more women than men studying law at university in the main common law jurisdictions (UK, Singapore, HK, Australia) but their numbers drop off significantly when it comes to achieving senior positions (Senior Associate/Partner) within the profession particularly within private practice. Most lawyers working under the NewLaw model have come from in-house rather than private practice roles particularly in Hong Kong. Some of the female lawyers had probably already left private practice to go in-house because of the still prevailing issues such as fewer promotion opportunities and the lack of work/life balance. It is also still predominantly women who cite spending more time with family/children as their primary reason for exploring the NewLaw model. There is obviously a level of financial sacrifice that has to be made by working under the NewLaw model. This applies across the board for men and women. It could be seen as another example of women not achieving the same earning potential as their male counterparts. I have observed overall a 60/40 women/men gender split working under the NewLaw model but the statistics get more skewed within certain industry sectors particularly finance when it is more like a 65/35 men/women ratio.
CL - Can you give us some examples of how NewLaw has levelled the playing field for female lawyers?
LH - In short, the best candidate for the secondment is the one who gets it. Female lawyers will be presented with the same opportunities as the men. One recent example was a 6-month acting head of legal & compliance role within a hedge fund. The female candidate secured the position. As I stated above there is parity of earnings for both male and female lawyer working under the NewLaw model. Pay levels are generally based on PQE and/or the specialist experience of the candidates. It is more likely to be the case though that lawyers seconded to finance sector clients will get paid more both because of the specialist nature of their work and the higher number of hours they are working.
CL - What challenges are there for lawyers transitioning into NewLaw?
LH - Lawyers will generally have to accept an overall drop in cash compensation of anything between 30 – 40% compared to working for either a big name law firm, financial institution of MNC. Under the NewLaw model, a lawyer will only be paid then they are working. This is generally on the basis of an agreed daily rate and their utilisation rates range on average between 60 – 90%. This model may not work for a primary breadwinner with a family to support and/or whose normal spending levels are those of a dual income (full time working) household. This is particularly the case in expensive cities like HK and Singapore. The quality of work and clients will be high but the lawyer needs to be comfortable with working as a consultant and not being given management or decision making responsibilities. Flexibility is also key because the lawyer could be seconded to between 1 – 3 companies in a calendar year and will need to adapt very quickly to each client’s working cultures. They may also have to cope with leaner resources in terms of the client’s personnel, legal knowhow, immediate access to templates etc. The NewLaw firm should provide back end management support and access to knowhow resources etc. but the lawyers are nevertheless expected to require a lot less ‘handholding’ than a traditional/Big Law firm secondee.
CL - What are the challenges of the NewLaw model in the Asia market?
LH - The Hong Kong business community is generally comfortable with the NewLaw concept and engaging other professionals on a consultancy basis. Singapore is also a very well-established market in this regard. Other legal markets in South East Asia are still developing but sometimes their needs can be addressed by parachuting lawyers in on a fly in/fly out basis in special situations. Multi-nationals based in Hong Kong are also very receptive to the NewLaw model and have organized their in-house teams to expand and contract as needed. We have seen that PRC and Hong Kong listed companies can be more reticent but, as in other markets, can expect this to change over time. Companies of all shapes and sizes will always need to adapt to the twin threats of cost pressures as well as the growing pressures of regulation and compliance that impacts the way all organisations will need to structure their legal teams in the future. The NewLaw business model is in essence the same across different markets in terms of how the lawyers are engaged by clients. The differences lie in relation to the labor law and regulatory frameworks of each jurisdiction. For instance, China and Japan have tighter labor law regimes than Hong Kong and Singapore in terms of how companies can engage staff and are more likely to consider the consultants as having employee rather than contractor status if there was ever a dispute over pay, holiday and sick leave entitlements etc. Whereas in Hong Kong for instance the NewLaw firm and lawyer can sign an assignment notice per secondment and the employees statutory entitlements are pro-rated accordingly. The question then becomes whether this flexible working model can genuinely take hold in Japan and China. There are certainly opportunities on the client side but the reality is that none of the established NewLaw players have opened offices in either jurisdiction despite having operated in both Hong Kong and Singapore since 2011. Other potential long term challenges which face the legal industry as a whole are the potential shortage of lawyers & particular skills sets and continued cost saving drives by the clients when it comes to engaging third party services. The perennial questions faced by all professional services firms include whether they need to either expand their service offering or find a niche and stick with it. Either way, staying relevant and being adaptable is key.
About Cognatio Law
Cognatio Law offers a solutions-driven platform to assist in-house legal teams in Asia that are struggling to reduce costs, headcount and fixed expenses, whilst still meeting clients needs and deadlines, by bringing in seconding experts available for one-off assignments as well as ongoing time-critical and sensitive projects, without having to incur additional permanent employee costs. Our legal team has 40 years experience of working with legal, compliance and risk professionals across the Asia Pacific region. We would love to work with you, contact us today!