As changes in international legal services continues to impact law firms around the world – a new business model within law has been developing for over a decade. That new business model is widely referred to as “NewLaw”. The characteristics that often define NewLaw law firms is a streamlined business model allowing firms to alternative fee arrangements. Oftentimes, lawyers who staff NewLaw law firms have come from BigLaw seeking an alternative to lateral hirings. NewLaw firms use technology, low-overhead and often virtual work arrangements, and sophisticated cross-functional disciplines, to achieve higher value for clients.
Noted legal blogger Jordan Furlong provides a detailed list of NewLaw law firms in a post which appeared earlier this year on his Law21 blog. Furlong describes NewLaw in that post “as any model, process, or tool that represents a significantly different approach to the creation or provision of legal services than what the legal profession traditionally has employed.” Furlong, importantly, notes that: “A disproportionate number of new legal talent arrangements are found outside the US.”
On Eric Chin´s opinion: “2018 is the year Axiom may become the world’s largest legal services firm”. Regardless of the certainty of that prediction, it is true that copycats and innovators are entering into the NewLaw market, as it is open for lawyers and non-lawyers alike.
With that in mind, and with the knowledge that NewLaw is an entrepreneurial business model, I will herein make the case why I believe Mexico is an excellent market for NewLaw law firms to consider for their foreign expansion planning. However, it is also important to point out that traditional law firms can apply NewLaw strategies to their Business of Law models, as NewLaw and traditional law are now being exposed and influenced by each other. Both models are experimenting to find growth around the world.
As Maria Luisa Taddia outlined last year in The Law Society Gazette last year, that Mexico is a remarkably open legal market – with a host of opportunities for foreign NewLaw law firms to consider. Some of the key attractions foreign firms should consider, Taddia outlines, are:
“Mexico is the second-biggest economy in Latin America after Brazil, and analysts predict it will rise to become the world’s seventh-largest – ahead of the UK – by 2050 … Mexican conglomerates are increasingly looking at international capital markets, including the London Stock Exchange, to fund their expansion … The Mexican government, led by… President Enrique Peña Nieto, is investing in infrastructure through a public-private partnership programme based on the UK model. There is also significant investment in renewables and liberalisation the state-controlled oil and gas sector … Mexico has 12 free trade agreements covering 44 countries, including the US and Canada (the North American Free Trade Agreement came into effect in 1994), and the EU (the EU-Mexico Free Trade Agreement dates from 2000). This makes it one of the most open economies in the world.”
Legal Market-specific opportunity for NewLaw law firms
As Taddia outlines, Mexico’s domestic legal market provides a deregulated, welcome environment for local law firms. The highlights include, as Taddia explains:
“Foreign law firms do not need to register with the local bar and can open offices under their home name. Although only Mexican lawyers can appear in court and advise on local law, foreign law firms can employ Mexican abogados to offer advice on Mexican law in addition to international and home country law. Membership of Mexico’s six bars … is not mandatory for the country’s estimated 265,000 lawyers.” However, a mandatory bar admission is in discussion at the Senate and could end up decades of deregulation.
In addition to that, I may add that Mexico has always allowed ABS models, as long as attorneys render legal services, and the rules for practicing law are less strict that those in common law legal systems. In certain way, Mexico has always accepted the practice of NewLaw, and now that the global legal market is trying to monetize it, Mexico´s deregulation is suddenly handy.
But as Taddia outlines, there is sophistication among those lawyers already practicing in the market. Too, the market is fragmented and smaller firms predominate. And historically, most of Mexico’s lawyers have been unwilling to commit to joining larger, international law firms. Security has been cited as a concern, however the Mexican government is committed to working toward greater safety and security for all in Mexico.
For many, however, Mexico is seen as an unknown market with not as many opportunities as many foreign law firms would wish to see to enter the country. But as Mexico’s economy continues to engage more with nations beyond the US, while affording greater opportunity domestically, the opportunities increase. A landmark case of acqui-entry is the merge of Barrera, Siqueiros y Torres Landa by Hogan Lovells last August 1, as this operation reorganized the legal landscape for local firms provoking lateral hirings and a tighter competition.
Given Mexico’s rise in the international economic order, it’s attraction to international law firms increases. And hence, by definition, those opportunities also exist for NewLaw, who may be in a position to ideally match opportunity with a competitively-priced service offer.
You can tell opportunity is in Mexico, as cloud infrastructure, specialized recruiting, marketing and many other services arrived Mexico a couple of years ago to support both NewLaw and traditional law to get them clients. They know things and NewLaw should listen up.
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