US lawyers Michael Pierson and Joel Ferdinand joined forces “with the vision to build the elite law firm of the future”, going in the opposite direction of the traditional market with a tech-focused, full-service approach. Oh, and no offices. And no associates.
Founded in January 2024, New York-based Pierson Ferdinand became the largest law firm launch in the US, with over 130 partners joining, most of whom came from FisherBroyles, where Pierson and Ferdinand were senior partners.
In just under two years, the firm has grown to over 260 partners across 26 locations, including its first non-US office in London, which opened last July.
“We looked around and said, ‘no one has built a tech-enabled law firm’, people have utilised technology, and others are making investments, but we thought ‘What is the future of big law going to look like in 10 years’ time, given what we know about remote working culture, an ageing workforce and Gen AI,” Pierson told City AM.
The focus was to redefine law firms’ practice by focusing on technology, culture and leadership.
Throughout the legal sector the tumbleweed has been noticeable when it comes to addressing the elephant in the room: the junior roles that will (or won’t) be required with the rollout of AI at firms.
The legal sector, particularly the top City law firms, has been investing millions of pounds over the last couple of years in technology and AI.
AI over Associates
At Pierson Ferdinand, the firm has fully embraced technology, largely replacing associates with GenAI through platforms like Harvey AI.
“What this really does is enable our partners to execute at a really high level because a lot of the first drafts of anything that would normally be done by junior staff can now largely be replaced by GenAI,” Pierson explained.
The firm has a couple of associates in its London office but, largely due to cultural differences, it has none in the US.
He explained that GenAI, used to replace associates, allows partners to focus on high-level work, delivering work products at a competitive price.
“We have the ability to provide the depth and breadth of legal practice that we would need without having to train the associates on our clients’ pound,” he added.
The firm has around a dozen on its ‘junior partner’ programme, for top lawyers who are in their fifth year and were identified as future full law firm partners.
“They join as a junior partner, and they shadow some of the more senior people, and learn what it is to manage the cases, client matters, invoicing process and developing a team.”
Pay wars intensify
This comes as the pay war over associates continues to intensify, with law firms in the City competing to outdo each other in pushing up salaries for their most junior lawyers, newly qualified (NQ), a trend that has seen many top English firms trying to match the compensation offered by their American counterparts.
On top of this, as every top law firm pours money into AI tools, the scepticism over what this will mean for jobs, especially junior roles, has been slowly whispered in the background.
The Anti-Jamie Dimon approach
Another area where the firm is saving costs is office space, as it operates as a fully remote law firm. The firm has no office space in the US, but it maintains a serviced office for its London partners at One King William Street, used for client meetings.
“We think it’s a mistake to say that everyone needs to be back in the office five days a week, because clearly the workers don’t want it,” Pierson stated.
In the last year, both across the pond and in the City, professional services and financial firms have been pulling back on remote working, as seen with JP Morgan, while others have gotten tougher with attendance monitoring, like Big Four firm PwC.
In the legal sector, each firm has its own policy, but on average, more senior lawyers are expected to be in the office at least 60 per cent of the working week, with management encouraging them to mentor junior staff.
“We were already working remotely in large part prior to 2020,” Pierson stated.
He noted that leveraging technology to accelerate growth can significantly improve lives, especially for lawyers who are already under considerable stress and pressure.
“By reducing operational costs for law firms substantially and passing most of the profit to our partners, we can make a positive impact. That’s really, I think, the compelling value prop to the partners who are joining us,” he added.
Money, money, money
The reasons for remote working, a focus on technology, and having few or no associates ultimately come down to the bottom line.
The firm created a compensation algorithm, largely defining how every single partner at the firm is compensated, “which is based on a very simple formula that awards origination credit, working attorney credit, which you call production credit, and then recruitment credit at the firm.”
“It is a fully transparent system where anyone can see who originated a matter, who produced, when the last time the client paid the invoice, and how the expenses were deducted, and of course, everyone’s compensation is visible to everyone in the firm,” he added.
At a time when the hourly billing system at law firms is uncertain, the adoption of AI is putting pressure on lawyers to rethink their charging methods for clients.
Pierson believes that the current system is not attainable.
At Pierson Ferdinand, partners don’t have mandatory hourly billable targets, as each partner can decide how many hours to bill. High performers are rewarded, but those who prefer fewer billable hours are also accommodated, due to the firm’s compensation algorithm.
He suggested that the firm’s approach to remote working, along with partners not being bound by hourly billable rates, has led to a diverse workforce, including 40 per cent female partners, above the average English law firm, which stands at 37 per cent.
At the heart of Pierson Ferdinand’s strategy, Pierson added, the firm’s model is meant to be “adaptable and responsive.”