Reading time: 22 minutes

Jerome: Hello welcome back to the Corporate Counsel Show. I’m Jerome Doraisamy. Today I’m joined by a friend of Lawyers Weekly, Thomas Kaldor who is the head of Legal Transformation at LegalVision. Welcome back Tom.

Tom: Great to be here. 

Jerome: So, today we’re going to be talking about collaboration between NewLaw firms and the in-house space and specifically when and why an in-house legal team might choose to brief a NewLaw firm. And Tom, we’re having this conversation on the back of some research that’s just come out from The Association of Corporate Counsel Australia and their in-house counsel trends report for 2019 which delved into the reasons why in-house legal departments might utilise a NewLaw firm. And what are some of the barriers that might exist when choosing between a NewLaw firm or perhaps a more traditional firm structure.

So, I thought we might dive right in to recount in some of the research if that’s cool with you and I might get you to respond to that.  

Tom: Sounds great. 

Jerome: So, the research showed that over the past three years, knowledge about the NewLaw business models has increased you know with the number of in-house counsel now using such models almost a two in five so it’s at 38%. And the most popular models adopted lawyer replacement agencies that’s at 23%, fixed fee firms at 20% and legal processing outsourcing at 10%.

You’ve been involved in the NewLaw space for quite a few years now. What’s your perception of the I suppose increase of in legal teams collaborating with the NewLaw firms such as yours? 

Tom: It’s obviously a topic that’s pretty close to my heart. A big part of what I do at LegalVision is trying to translate our value proposition to the in-house or what we call the ‘enterprise segment’. So, always keep a close eye on these stats and every year or so when it comes out I reflect that the the numbers are that in-house teams are aware of NewLaw business models, but always a little bit disheartened about the number of people that are actually using NewLaw models and new ways of working.

But those stats are definitely comforting. I suppose the awareness piece is a great sign that our marketing team and others in the industry are doing a great job. But from my perspective what interests me is are the models being used. And you know the first reflection that I’d have on those stats is that within the NewLaw landscape like we’ve had discussions of in the past there’s a range of different business models that are quite diverse and doing different things. You know I wouldn’t be comfortable fitting LegalVision into any of the specific categories that you mentioned but probably closest to what’s described there as a fixed fee law firm, I guess. but would probably you know present it slightly differently.  

We talk about ourselves as a legal services business leader and managed legal services within the enterprise segment. And you know it is the usual suspects that we see in-house teams using around you know specifically LPOs and you know contract lawyer services. And I think the reason for that they’re the you know there’s a lower barrier to use those types of models because they are ultimately about either resource augmentation. You need a couple of new bodies on the ground so you go to a contract lawyer to get those bodies in the team and that’s obviously a really quick. And valuable solution to that problem or similarly there’s a whole lot of kind of stuff that the teams doing that the team shouldn’t really do you look to outsource that. It’s the I’d say more innovative models or more transformative models that are harder to get anchored within in-house teams and that’s ultimately, I have a job and why tackling that challenge within LegalVision. 

Jerome: Fair enough. You mentioned the barriers there and I was interested in what you were saying about LegalVision not necessarily fitting into any of the categories that I’d outlined mean the lawyer or placement agencies, fixed fee firms etcetera. And I suppose that at face value that might in itself Fiat be a barrier that the perhaps there’s perceptions about what a NewLaw firm is or isn’t not realising that it may indeed catch all of those different categories maybe it catches none of them. And therefore, perhaps not fully understanding and appreciating what it is that such a firm can offer. 

Tom: Completely I think what unifies all of those models and you know NewLaw as a proposition is that it’s trying to tackle similar problems which is you know providing more valuable more accessible legal services for clients. And in the in-house segment for general counsel and in-house teams it really is a shared challenge that brings all of those different business models together which is these teams you know having to do more with less they want to focus on the strategic work. And all of those business models that you mentioned solve that problem but ultimately, they solve it in quite different ways. And ways that are really dependent on where the in-house team is that in you know what you could call a ‘transformation journey’.

So, it is much easier to say we know we need more resources so let’s bring on more resources than it is to say we know this area of work could be done in a more efficient way if we changed processes – if we looked at a managed service provider – if we deployed technology. Those things require a further stage along you know further steps along the journey of transformation and therefore create barriers to implementation for those teams. 

Jerome: Let’s talk a little bit more about some of those barriers and we’re ultimately now doing this episode backwards to how I had thought about it in my head before you arrived this morning, but that’s all right. So, looking again at the research when asked why an in-house team might be reluctant to go with a NewLaw option, the respondents to the survey said that well 35% of them said that they were satisfied with their current law firm relationships 39%  said a lack of time to understanding all the different offerings was a factor, 22% said quality concerns and a lack of time to build relationships with a new firm was sitting at 21%. And with all four of those reasons those numbers were up from the previous year.

So, when it comes to addressing some of those barriers like the idea of you know you’re comfortable with who you’re already working with you don’t really understand what the new options are and you don’t have the time to understand them and then you know having the ideas of being concerned about the quality of it and then feeling like you don’t have the time to build up the relationships. How should NewLaw firms respond to some of those perceived barriers? 

Tom: Look the industry we’re in it’s been long established that quality of providers is your ticket to participate and that applies regardless of whether you’re an LPO, a contract lawyer service, a new age or new generation of law firm or a pure technology business. And that makes it a tougher industry to participate in, but frankly there is no point participating the legal service industry unless quality is a threshold.

And that’s certainly our philosophy a LegalVision and that’s why you know hiring strategy is focused on bringing on really high-quality lawyers that are employed by our business to deliver the services because we know quality is not negotiable. So, I’ll leave that one there, but the other two kind of buckets of themes I’m really interested to pick up on the one about satisfaction with current providers and then a lack of time which is both time to understand and time to build relationships.  

The first one is definitely a challenge that resonates for LegalVision if I think about the kind of early adopters of our model or the businesses that have had the most success working with LegalVision. The way we’ve met those businesses has been when they have a need in an area they don’t have a current solution for so a kind of point in time business transition project, where there’s a burning platform to find a solution and the options that they usually go to for existing work just don’t solve that in an adequate way.

And that’s our foothold into a relationship with those businesses. Kind of somewhat ironically, it’s not where NewLaw models can necessarily add the most value. It’s often with the ongoing business as usual work where technology or process improvement can really transform the way the team’s working and it’s the way the team’s working on an ongoing basis for the long-term that you really get the benefits of NewLaw. But the realities in those areas there’s a current provider and if you’re somewhat happy with the current provider it’s a much higher threshold to want to change so that challenge definitely resonates for LegalVision. 

Jerome: When I look at these perceived barriers to engage in NewLaw firms, I’ve sort of put them in two different categories. So, the quality concerns that for me is a separate thing altogether in that perhaps people don’t understand or appreciate what it is a NewLaw firm might be able to provide, but that those are questions that you could answer if you were given the opportunity.

Whereas the idea have been satisfied with your current firm relationship and thinking that you don’t have enough time to build up a new relationship or to understand what it is NewLaw firms are offering those to me seem to be related and it strikes me as being problematic in that you know you’re obviously trying to get people to move away from their existing relationships. But if they feel like they don’t even have the time to go out and meet you or and then they don’t even have the time to understand what it is you have to say that seems to be like a huge hurdle that would be very difficult to get over. 

Tom: For sure and definitely want to explore the lack of time point with you here because I’d say even more so then satisfaction with current provider that’s a challenge that resonates with LegalVision in that as I said unless there’s a burning platform it’s certainly harder to tell the story of why LegalVision or a NewLaw provider can do the job. But as you say, if there’s no time from the person you’re trying to explain that to it’s very difficult to get that message over the line.  

Interestingly in our experience the lack of time doesn’t necessarily relate to whether they know about LegalVision or understand what we do or build relationships. We find you know probably because we’re one of the bigger NewLaw models we’ve been around now for you know five years as a law firm and seven years in different iterations. So, we’re kind of becoming in an older version of a NewLaw business model which we’re proud of and ultimately that gives us you know longer to have built these relationships. 

Jerome: So, you’re newish law [laughter]. 

Tom: Yes, newish law. I’m not sure if that title will quite it and take off as much as NewLaw, but we can try it. But certainly, a lack of time to invest in kicking off a project is a real barrier that I see day-to-day in working with in-house teams on transformation legal projects. And it comes down to things like when you’re trying to present internally a business case for change for how you do a certain type of legal work. So, for instance advertising review, a business as usual air of legal work where you almost definitely have a current solution, whether that’s working with a an external law firm a traditional law firm, whether it’s doing it internally or having a contract lawyer service supporting you there’s a current solution in place because it’s part of the day-to-day work.

To convince people internally then a new option for doing that work is the right way to go, you need to be able to quantify what that benefit will be. That’s kind of standard business case logic; what are we going to get from rolling out a new way of working. But if you don’t yet know your base case you know how much time is taking us already what does it cost us currently then it’s very difficult to put the business case forward.  

And I suppose the point that I’m making in something we come across a lot is the Innis teams don’t even have time to work out what the base case is because they’re too busy focusing on delivering great legal services for the business. And you know this is less the case when there’s a very specific area that the clients trying to tackle like advertising review it’s possible to say or we have this one person in our team who’s doing it full-time. You have sort of quantification of that or we spend this much with external law firm.

We see this more in the kind of ad-hoc outsourcing; so, the needs that you might get a contract lawyer or a secondment or you know look to outsource work to a law firm- traditional or new we see it as being a much more of a challenge there. And this is the space where we have an offering that we called a “Desk Extension”. And this is essentially where in-house teams can send us an ad hoc mix of work that needs doing but that they don’t want to do within their team because it’s maybe doesn’t have enough strategic value or whatever. And the challenge we see there is that the teams don’t yet know how much time that’s taking them and so it’s hard to say we’re going to save you this much time or this much money because the base metric isn’t in place yet. 

Jerome: So, just as a general proposition based on what you were saying there is it I suppose the first step for a NewLaw firm whether it’s LegalVision or someone else is to be able to communicate your business plan, your messaging in a way that is I guess caters to the idiosyncratic needs of that in-house legal team or department as opposed to just doing what you think makes sense. 

Tom: So, in the new year in 2020 LegalVision is going to be launching a GC Transformation Toolkit which would be a kind of series of tools and knowledge that we think will help GCs tackle these problems. And the first step for us is actually you got to know your industry but that’s you know most GCS we meet somewhere along that journey.

But the second step is what you’re getting out which is know your function; you know what’s actually going on the ground in your function because it’s very hard to say I want to prioritize solving advertising review or general commercial contracts if you don’t yet know how much of that is happening within your business. You know are they generally complex or not complex are they things that we could outsource or are they of strategic values. Can we do them with a playbook? Just knowing that sort of foundational information is critical to being able to roll out new technology or new ways of working. 

Jerome: That’s interesting. Do you have any particular examples of how best a NewLaw firm could tackle that? 

Tom: For sure so I mentioned our kind of desk extension offering for the in-house segment earlier and that is one that we’ve been really focusing on over the last six to twelve months and it’s really evolved because of this challenge. So, originally it was very much something to compete with secondments or contract lawyers where we’d say you know this will be a more efficient way of dealing with that same legal need. But we kept running into the challenge of well we don’t know if it will be more efficient because we don’t have a base case from the in-house team.

So, we’ve really taken on that feedback like a NewLaw model should do respond to the feedback of users and clients. And we’ve decided that the first kind of phase of any engagement that we put forward with a client in that space is partly about solving their legal need so doing the legal jobs that come to us. But it’s also about ending that period with data and analysis and reporting that empowers the in-house team to say, we now understand what type of work is in that bucket. And so, it’s thinking that it’s not just a value proposition for us to do the work but also to help the in-house team increase its knowledge base on what their function looks like and it’s something we’re really excited about. 

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Jerome: So, Tom the other part of the in-house counsel trends report that I wanted to touch on was the reasons that in-house teams are choosing NewLaw firms and the most popular responses that came up were the ideas that NewLaw firms could meet their stated requirements within a certain time frame; so that was at 45%. 45% also said that the increased flexibility offered by NewLaw firms was a benefit. 40% said improved value overall. And 37% said a lower cost base.

When you sort of think about those reasons why in-house teams are choosing NewLaw firms and you then I suppose put it in the broader context of the number of in-house teams overall that are choosing these NewLaw firms, how well do you think the NewLaw space is faring when it comes to I suppose offering those stated benefits, but then I suppose also being able to communicate that they are in a position to give those benefits? 

Tom: Well I think it’s a big reason why important research like this from the ACC is so useful to players like LegalVision in the NewLaw space. It’s because we need to listen to what’s working and kind of double down on those areas. So, for me the lower cost one is a bit like the quality one for in the other bucket of reasons and that’s again I think most in-house teams and general counsel would expect if they’re going to a NewLaw player that there’s going to be some cost benefit to them. And so again kind of threshold requirement ticket to play. But in my experience, it’s rarely the case that an in-house team would make a decision to work with a new provider purely on the basis of lower costs. And again, that’s why I think it’s very much ticket to play rather than the thing that actually makes the relationship.

So, the other buckets that you mentioned around improved value proposition and you know meeting the requirements that in US teams are coming to NewLaw players with are so much more important. And I think this research demonstrates that the segment as a whole is doing a great job to have these conversations. But certainly, there’s always much more that can be done.  

Interestingly on that first one that you mentioned want to pick up on that it’s stated requirements within the required time-frame. And I think that’s a really important element of NewLaw is building in things like when a project will be delivered or when a particular task would be delivered into the offering itself. So, it’s no longer a question of your buying expertise from a lawyer and you’ll get it in however long it takes that firm to do. We see in the projects we run and this is consistent with that sort of feedback from the ACC research is that timing in the form of say in SLA and you know an expectation of when the work will be finished is as much a part of the product as the quality. And I think that’s a really important one that would be worth calling out because maybe it gets hidden in that stuff. 

Jerome: Absolutely. And one of the things that’s interesting for me when I’m looking at these two buckets of reasons that we are talking about here, one being the barriers and then also the benefits. Is that they seem to be somewhat correlated? And so, I’m specifically looking here at the idea that in-house teams see NewLaw firms as being able to meet the stated requirements within certain times. But then when we look at the barriers some in-house teams are saying that you know they don’t have enough time to understand the offerings – they don’t have enough time to build a new relationship. And I suppose the irony there is that if they were to engage with these NewLaw firms then time just wouldn’t be a factor because clearly other in-house teams don’t seem to think that it is. 

Tom: They’ll have much more time if they work with more NewLaw providers is the definite message and one that I would definitely adopt. 

Jerome: But it seems like this strange “chicken and egg” thing because clearly some of the barriers that in-house teams have you link up with some of the benefits that other in-house teams are seen. And so there’s just that middle ground where perhaps the communication is breaking down between some NewLaw providers and also some in-house teams. The question is how best to bring those two bodies together. 

Tom: For sure and it gets back to the example I was giving earlier around the Desk Extension. When we first offered that to the market the feedback was, we can’t take this on because we don’t know how much it will improve what we’re doing because we don’t yet know what we’re doing into of volumes and costs. And so, saying actually part of our offering will be to help reveal that to you – help give you visibility over that. And if we didn’t do that it would remain a barrier, but responding to that feedback we’re able to say after three months of working with us we can tell you what your ad hoc legal needs are.

You know 10% is really complex stuff that there’s not a lot of opportunity use technology. 50% is stuff that they’re somewhat complex but can be done externally and might be able to have some process improvement. And then there’s this other 40% where there’s a huge opportunity for you to deploy technology through pure automation and we could say you should speak to this provider on that front. Or maybe it’s 40% that can really put a lot of process around and would recommend pursuing something like a you know managed service model for that so having visibility helps bridge that divide that you’re referring to. 

Jerome: And Tom what would you as a NewLaw provider need from the in-house space when you’re having these conversations? So, obviously you know you’ve outlined what a NewLaw provider will need to do in order to bring the in-house teams to the table but it has to be a two-way street of course. So, what would you need from them in order to ensure that a relationship can move forward successfully? 

Tom: Look an in-house team that has a lot of data and visibility on what it’s doing is in a prime position for rapidly moving towards a transformation project or a new way of working including something like working with LegalVision. But we’ve come to accept that given the huge amount of pressures that are on in-house teams and the huge amount of priorities they have that is the exception rather than the rule. So, as I said our model has flipped much more towards supporting the in-house team to get those kinds of information base.

And all I would say is what we hope to see from in-house teams what we would expect in that kind of mutual relationship, is there’s a willingness to explore that current state and one of the best ways to do that is through working together on actual live projects. We also use things like legal process design workshops to uncover and reveal this information. And again, those workshops and similar exercises entirely depend on in terms of the value you get out of them whether there’s engagement and an openness from the in-house team and also the businesspeople that come along to those workshops. Because ultimately, it’s about seeing this is more than just a legal issue and something that can add value for the business as a whole. And so, having business people in the room is super important as well. 

Jerome: I suppose as with anything in life open honest communication is paramount. 

Tom: Definitely. 

Jerome: Tom this has been a hugely helpful and practical conversation I’m sure for not just in-house lawyers, but also hopefully some NewLaw providers too. So, thank you so much for joining me on the show. 

Tom: Thanks for having me along Jerome. 

Jerome: That’s all we have time for today. Thanks for tuning in. If you have ideas for other in-house episodes, we could run please get in touch otherwise we’d be greatly appreciative if you could give us a rating on whatever platform you use to listen to podcasts as it will help other in-house counsel discover and enjoy this show. See you again next time.  

This is a transcript of an interview hosted by Lawyers Weekly in November 2019.


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