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As the legal profession lurches towards the future, the area that has been ripest for change is how lawyers deliver their services and the platforms they use.
As recently as a decade ago, when a global company wanted to do a big deal, such as a merger or spin-off, it would generally be a partner at the law firm who would oversee the project, with associates and colleagues in various departments helping to advise on matters ranging from tax to employment law. Other firms would often be brought in, too.
That basic delivery model is becoming increasingly outmoded among European law firms, as some strive to offer more, equally well-managed project models.
There are two main forces at work. First, cross-border deals are becoming more and more complex. They often include acquirers and targets with offices or subsidiaries in dozens of jurisdictions with their own web of laws and regulations. Then there is the pressure from clients to keep costs down.
The industry has witnessed the rise of the low-cost legal centre, led by firms such as Allen & Overy and Herbert Smith Freehills, with operations in Belfast. Many law firms have appointed “innovation leaders” to help deal with the pace of change. Firms that provide lawyers on a project or temporary working basis have also sprung up as a flexible staffing tool, including Allen & Overy’s Peerpoint division or Pinsent Masons’ Vario.
Allen & Overy, one of the UK’s Magic Circle — a group of top-tier law firms based in London — has developed an “advanced delivery” model in an effort to handle big deals more creatively.
“We have become more sophisticated about [delivering legal advice], whereas 10 years ago there was just us lawyers, and we had some technology,” says Gillian Holgate, a partner in Allen & Overy’s corporate department who helped spearhead the advanced delivery system. “The deals we do now are bigger, longer, more complicated and multi-faceted than the deals we were doing 10 years ago.”
Allen & Overy now staffs big deals with a project manager, who is often not a lawyer, and uses lower-cost legal resources such as paralegals at its Belfast office to handle more routine or bulk work. It also taps into its network of flexible and temporary lawyers from its Peerpoint unit, and uses Collaborate, a legal technology platform from HighQ, to give clients real-time updates on work done and where problems are emerging or look as though they might.
The overall aim is to keep clients close to the firm by handling more or less every aspect of a transaction, rather than taking on just the high-end bespoke advice while farming out more everyday work to other law firms.
Giving clients access to technology platforms so they can continuously monitor progress and receive updates has been a significant development. Most law firms are investing heavily in legal technology. Applications range from speeding up document searches to helping to predict the outcome of lawsuits or potential regulatory problems in the course of closing a deal.
“The main driver is cost: given that the deals are so big and complex and there are so many documents, on the face of it doing these deals would be very costly,” Ms Holgate says. “Larger law firms have been thinking very carefully about how we do [these deals] while still giving the client the quality.”
Keeping the work in house has also helped firms increase their profits. Allen & Overy’s direct income from Peerpoint, its project management office and other businesses is equivalent to Allen & Overy’s fifth-largest office.
Similarly, some smaller law firms are expanding their services in an effort to retain client business by offering services beyond legal advice.
MJ Hudson, which was formed in 2010 to advise the alternative asset management industry, set itself up as a so-called alternative business structure, under which law firms can open other business streams.
The firm has set up a one-stop shop for hedge funds and private equity firms for undertakings such as fund formation, investor relations and compliance. Last year, it acquired an alternative investment fund manager platform, and AllenBridge, an investment advisory company.
MJ Hudson — which calls itself a consultancy, rather than a law firm — is planning further acquisitions, with an eye towards being able to handle all the advice for newly created hedge funds and private equity firms. It has grown rapidly, from two people to 125 employees in six years, and now represents some 450 asset managers.
For one client, Volpi Capital, which hired the firm to set up a software and technology-focused buyout fund, it provided everything except tax and Irish mergers and acquisitions advice.
Ultimately, more than ever, law firms must frame clients’ needs as business problems that require answers, rather than focusing on a legal solution.
“When you’re pitching to a client, they don’t want to know about the legal bits, they don’t want to know about the issues — they want to know how you’re going to do [the job],” says Ms Holgate.
Law firms in the UK are seeking to nurture small clients that have the potential to grow into large companies by backing the financial technology (fintech) sector with their own start-up funds.
Addleshaw Goddard and Simmons & Simmons, for instance, have both set up programmes to provide free legal advice to start-ups or early-stage fintech funds.
Addleshaw’s fund, AG Elevate, launched in February this year when seven businesses were chosen as inaugural recipients. The London-based firm has allocated £500,000 for the programme, which will advise on payment systems, and key corporate and regulatory matters.
“We’re really trying to offer our services for free to those who wouldn’t be able to ordinarily afford them,” says Fiona Ghosh, head of Addleshaw Goddard’s fintech practice. “The thinking and the hope is that they will want to carry on their relationship with us.”
The funds chosen by Addleshaw this year are based in London, but are also as far afield as Dubai and Hong Kong.
“We were really taken aback by the popularity of the scheme, so we realised it was something important we were doing,” Ms Ghosh says. The firm plans to continue the programme for at least another year.
Simmons & Simmons launched its £100,000 fund in May 2016, with the aim of assisting four British fintech businesses with free legal advice. Kush Patel, co-founder of Tallysticks, a specialist in supply chain finance and one of those four businesses, says the fund “is not only innovative in providing something not offered by others, but also in fostering innovation by assisting fintech companies in delivering their products to market”.
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