At the beginning of the 21st century, in 2002, the first ‘new model” (aka distributed or virtual) law firm was launched. The firm, FisherBroyles, now ranks 148 on the AmLaw 200. At the start of 2024, 130 lawyers spun off from FisherBroyles to form Pierson Ferdinand, offering changes to the original model. Pierson Ferdinand now has 207 lawyers in 97 practice areas and 24 cities. It’s anticipated that they will join the ranks of the AmLaw 200 in 2025/2026. Based on our research, there are only about ten new model law firms based in the US. It’s notable that one if not two of them are now in the AmLaw 200.
As we look ahead to 2025 and beyond, what are the prospects for further growth and evolution of these new model firms?
What is a new model law firm?
A new model law firm is one that’s not dependent on location, allowing lawyers to work remotely from anywhere while providing full service to their clients using technology to accomplish any task related to the practice of law. The best virtual law firms use cutting edge technology to create a platform for a decentralized, efficient, and profitable firm. Attorneys gain control over their practices with higher takeaway pay due to decreased overhead costs and a tech-forward environment. They have flexibility in setting billing rates and fee arrangements, benefiting their clients.
Clients with complex legal issues often need attorneys licensed in different states or across practice areas. Virtual law firms make it easy to enter into joint representation and work as a team, increasing the capacity to take on these challenging legal issues.
As a general rule, firms that retain more of the revenue generated by the attorneys provide more services. Most virtual firms offer IT, marketing professionals, accountants, HR, and financial specialists to keep the law firm running smoothly. Partner compensation structures include intra-firm referrals and take-home pay rates higher than you’d find in a traditional firm. While most traditional firms operate on a 60/40 split of revenue, new model firms offer as much as 80% to their lawyers.
Rimon Law has had success offering more substance for slightly less compensation to its lawyers. It currently has over 225 attorneys and added 50 lawyers in 2024, its most on record. The firm offers a marketing team, associates, clerks, and full-time tech support. It keeps closer to 70% of revenue. The firm’s back-office operation, Novalaw, received a private equity investment from a portfolio company of Alpine Investors.
Pierson Ferdinand’s compensation model uses a proprietary formula to calculate monies owed, and connects to a central finance and accounting system. Partners then can log into an online portal and see origination, production, and recruitment credits. The system is “fully transparent” “where everything is seen in real time.”
While new model law firms don’t have centralized office space, many do have offices. The difference is that attorneys choose whether or not they want to use a brick-and-mortar office. These are some options:
- Co-working office spaces
- Office shared with other attorneys within the firm – cost is shared by these attorneys
- Dedicated office space – a cost that is the sole responsibility of that attorney.
What are the challenges facing new model law firms?
As recruiters, we know firsthand the resistance to new model law firms by lawyers in traditional law firms. Given that such firms have existed for only about 25 years and traditional structures for law firms have existed for 100 years and more, the resistance is understandable. Perceptions and misconceptions in the legal and business community need to be addressed head-on by the new model law firms.
Here are some particular challenges:
- Succession planning
- Building culture
- Creating a sense of ownership
Pierson Ferdinand is attempting to address these challenges with plans for significant investments in technology and the creation of new tiers of attorneys below the partner level. This should create succession planning opportunities while enabling lawyers to employ leverage.
In addition, the firm’s lawyers and leaders have “consistent, continuous and purposeful contact” with annual firmwide retreats. They offer a mentorship program for its lawyers that includes a leadership series and “multiple opportunities to learn from much more senior lawyers at the firm.”
Another example of a firm employing proactive strategies to create a culture of connectivity is Practus LLP. Their Chief Cultural Officer works to make people feel seen, acknowledged, and comfortable. The firm provides opportunities for fun virtual interaction—parties, contests, sports pools, happy hours, and coffees. They have an intranet Teams chat on a weekly basis, a “Snack & Learn” series, and the firm recognizes birthdays and employment anniversaries.
How are brick and mortar firms responding to market conditions?
In response to market conditions including adoption of remote work policies and increased productivity fueled by integrating new technologies, and the rise of new model law firms, brick and mortar firms are offering alternatives that compete with new model firms. Several are addressing the demand for remote work by their lawyers and staff while embracing the advancements in technology. Husch Blackwell offers a remote-work program, dubbed The Link. Fennemore has a program that sets it apart from other “distributed” firms. It includes the firm’s resource center, staffed with paralegals and administrative personnel that help with overflow work, the availability of associates to support partners’ work, and a deep bench of “Am Law 200 quality” lawyers. This is as much a tool to allow growth via new attorneys as it is a way to deliver flexibility to existing attorneys previously attached to brick-and-mortar offices.
Which lawyers are the best fit for new model firms?
The new model law firms are not for everyone. The best partner candidates are:
- Fully self-sufficient with enough work to keep themselves busy
- Entrepreneurial
- At Big Law, feeling billing rate pressure and rainmaking expectations
- Facing mandatory retirement policies
- Sole practitioners or at boutiques, but with Big Law training
What are the market conditions favoring new model firms?
- Many firms are instituting Return To Office policies.
- Billing rates for partners and associates continue to rise astronomically.
- Technology continues to evolve rapidly, including the use of AI.
The Future
New model law firms are likely to continue to evolve, as technology evolves, and will persist—with more “traditional” firms adopting some of their characteristics. If you would like to know more about these firms and how they could be a good option for you, please contact us.