Law firms position themselves at the heart of business deals
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Few lawyers learn about organising private equity conferences or setting up merger and acquisition deals in graduate school. Faced with changing demands from clients, however, law firms are looking to offer additional services that are not traditionally associated with law firms and are using technology to deliver their existing services more efficiently.
Nowhere is this clearer than in private equity, where clients care about a steady flow of deal opportunities.
One law firm, McGuireWoods, saw that introducing entrepreneurs to capital providers was something that could help differentiate it in the fast-growing field of independent sponsors, who are usually entrepreneurs or former industry executives looking to buy into companies but who need private equity financing.
Rather than just provide legal advice, McGuireWoods has encouraged its lawyers to be at the centre of new deals by expanding their networks of potential contacts. They visit trade shows, talk to business owners and make introductions as well as organising an annual conference at a Dallas hotel, which this year hosted 600 companies and investors.
“It has forced lawyers to do things that we did not learn in law school . . . we have to go and meet owners of companies and see what they are looking for,” says Jon Finger, partner at McGuireWoods. “It’s a different approach to that which lawyers have traditionally taken.”
The firm also has a master list of private equity contacts in its network complete with details about their investment criteria and template emails for making introductions so that lawyers can act quickly if they hear of deal opportunities. By setting up introductions to potential capital providers and deepening their links, the hope is that clients will want to hire the firm to do related legal work.
In the past such matchmaker types of service have more often been provided by investment banks.
“We introduce people in person or by email and that’s the end of it,” says Mr Finger. “If it leads to a deal, then great. I lose count [of] how many times I’m told they have never had a law firm do this for them before . . . We trust over time that’s going to take hold.”
McGuire introduced Abbey Road Capital, an independent sponsor, to private equity firm Route 2 Capital Partners in order to purchase Convert IT Marketing, which provides pay-per-click marketing, earlier this year.
Professor Gabriel Teninbaum, director of the Institute on Legal Innovation and Technology at Suffolk University law school in Boston, says many law firms now host advice sessions on non-legal issues, such as blockchain, to help clients.
“Law firms are clamouring to host these sorts of events as it’s part of the changing model if they can see themselves as part of the ecosystem,” he says.
One motivation for providing additional services is that law firms are facing greater demands from clients for efficiencies as they look for ways to cut legal costs. Many clients want to pay fixed fees rather than law firms billing by the hour and are pushing lawyers to deploy technology to reduce costs.
“The billable hour is not dying but it’s not the only way to do business,” Prof Teninbaum says. “Clients are demanding that firms switch to fixed fees or look at innovation to become more efficient. Some of this is trickling down from in-house law departments where clients may already use document automation, for example, and expect that to be used by law firms.”
As a result, he says, law firms are hiring so-called legal solutions architects or knowledge engineers. They are legally qualified but operate more like project managers — they may have some knowledge of Six Sigma process improvement techniques, for instance — and will decide how best to proceed with a big piece of legal work.
They will decide which parts of a sprawling lawsuit or M&A deal need a partner to analyse and which less complex aspects can be delegated to an artificial intelligence program. “A lot of their time is spent thinking about how to do things more efficiently,” Prof Teninbaum says.
Other law firms are using technology as a way to protect clients or offering them much broader solutions to what is essentially a business problem.
In the field of trademarks, the law firm Sterne, Kessler, Goldstein & Fox set up a one-stop shop brand protection practice that helps clients to combat problems such as infringement and counterfeiting across multiple jurisdictions.
It can deploy a multipronged armoury of tools ranging from district court applications against unknown defendants to seizing assets from unknown online sellers and tightening the supply chain so that the client is not playing “whack-a-mole” with the same counterfeiting problems in different countries.
In the case of ecigarette company Juul Labs, Sterne Kessler worked with it on a global enforcement campaign to address counterfeiting and infringement with district court litigation and also co-ordinating with counsel in Europe, Asia and the Middle East.
Juul recently filed a complaint in the US International Trade Commission against 24 entities in the US, China, and Uruguay for selling copycat so-called Juul-compatible pods in the US, which violated patents held by the company.
Monica Riva Talley, head of trademark and brand protection practice at Sterne Kessler, says brands need a multi-faceted approach to combat counterfeiters.
The firm takes a holistic overview of many areas, she says, before coming up with a tailored answer to a problem. “We might say you need to address this issue here but also bolster your protection in these other jurisdictions and protect the rights you have got,” says Ms Talley.
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