March 2, 2023 • 23 mins
Rob and Murray return for the second edition of the GMT podcast. More than at any time in the past, clients have an abundance of options for outsourcing legal work. Traditionally most, if not all, of the legal work sent out by corporate law departments went to law firms. And while this is still where most of this work goes, things are changing. Increasingly, alternative legal service providers (ALSPs) and even the Big Four accountancies are offering cost-effective legal solutions for clients of all stripes across the globe. Is this gloom and doom for the traditional law firm? No, but it does mean they need to continue to find ways to be competitive, clearly articulate their value proposition and be innovative in their approach to client service. We are seeing ALSPs and the Big Four growing in prominence on the global stage and increasingly encroaching on the US market. We will discuss a bit of the current state for ALSPs and how firms can defend their turf and increase market share in the face of this growing competition both at home and abroad.
Contact Rob and Murray:
Robert C. Bata, Founder and Principal, WarwickPlace Legal
Email: rbata@warwickplace.com
Murray M. Coffey, Founder and Principal, M Coffey
Email: murray@mcoffey.net
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Unknown (00:00):
Robert, welcome to GMT, the podcast for globally minded
(00:05):
law firm leaders with your host.
Robert Bata, principal ofWarwick place legal and Murray
Coffey, principal of M Coffey,between them, Rob and Murray
have about three quarters of acentury's experience working
with some of the most notablelaw firms on the planet. This
podcast is designed to helpthose law firm leaders tasked
with growth make great decisionsabout whether and how to
(00:28):
implement cross border expansionfor their firms and what it
takes to succeed. And now. RobBata
Rob Bata (00:42):
Hi Murray. We're back for the second session of our
podcast. That's great to seeyou. Great to be with you,
absolutely. And this time we'regoing to be talking about ALS
fees, or alternative legalservices providers and what they
mean for the legal profession.
We're not going to have atremendous number of predictions
or talk about a lot ofphilosophy, but just about how
(01:05):
it all fits into what'shappening with the legal
industry around the world. Manyalsps have been on the market
for a long time now. They'veshown extraordinary growth, and
I think that it's time, ifpeople have not paid attention
to them, it's time for law firmsto pay much more attention. Of
(01:29):
course, many are because theyhave their own captive alsps.
The one thing that I would liketo say, and I'm going to turn it
over to you, Murray, is that Igave a I gave a lecture to the
Israel Bar Association aboutfive years ago or so, and at
that point, alsps were an $8.4billion business. Today they're
(01:49):
$21 billion business. So thatthat's a more than a 45%
increase in terms of compoundedannual growth rate, and that
really does mean something. It'salso true that law firms own
(02:10):
some of their alsps, thesecaptives, as they're known,
they've increased 6% not 6% sixtimes over the past five years.
So it's something to think aboutand pay attention to.
Unknown (02:26):
Yeah, and, and, and I'll add before we start, we're
both. We are both broadcastingfrom the great state of Texas on
this I'm in Dallas, and Rob isin beautiful Austin, Texas on
the sunny day February. Yeah,Rob. I mean, the, I think this
started out as a conversationbetween you and I about the news
a couple weeks back, about oneof the first mover, or one of
(02:50):
the early movers in the Alspworld, axiom starting up their
own law firm. They're actually,they're actually creating their
own law firm in Arizona.
Arizona, as you know, is one ofthe jurisdictions that has set
aside ABA Rule 5.4 which hashistorically mandated that
ownership of law firms, lawfirms gonna cannot be non
(03:12):
attorney ownership of law firmsor participation in the profits.
And Arizona set that aside. Acouple of other jurisdictions
are looking at it andexperimenting with it, and
certainly we've seen it in thein the cross border context with
which I know you're going totalk about, kind of what, what
that Alsp, what the en y, PwC,KPMG, legal departments, sort of
(03:34):
what those look like in terms ofcompetition, but axioms formed
axiom advice and counsel inArizona, they're focusing on
some, you know, some, somereally strong areas of the law,
areas of the law that thatrequire a great deal of
efficiency and also require asignificant amount of people
power to, you know, get these,get these pushed over the over
(03:56):
the finish line. And so it is aninteresting development. We'll
see what happens. They haveplenty of resources, both in
terms of funding and in terms ofcapabilities that they're going
to be able to apply to this.
Then we'll see where it goes. Ijust started, you know, they've
got a they've they're, they'regrowing quickly, as all these
(04:18):
alsps are and and I think it'sgoing to be an interesting
development for the law firms,as they're looking at this as
its competition. And as yousaid, we've got some firms that
have captive alsps, and we'veall we're also seeing strategic
partnerships. But I think that,I think that you know where
we've seen some of this, some ofthis, these alternatives to law
(04:41):
firms, if you will, pop up havebeen in initially, early on in
the global context, and we'restill seeing that. So maybe you
can talk a little bit about sortwhat your experience has been.
Rob with seeing some of these,this in the global context, and
what it's done to thecompetition
Rob Bata (04:57):
and all. Murray, I think it would be interesting.
Interesting, also foreverybody's understanding, just
to understand, really what thesealsps do, because at this point,
as sophisticated as some of themare, they're not just a
replication of a law firm,correct. They bring a certain
(05:18):
capability, which is casemanagement and and legal process
and so forth. So when we talkabout axiom, for example,
starting up a law firm that's alittle bit different from the
from the classic Alsp. Can yougive a little bit more, put a
little bit more flesh on whatalsps actually do in terms of
(05:40):
their function. They're not theones that do enormous merge
acquisitions, although they dohandle much of if you will, the
back office. Part of that, yeah,
Unknown (05:53):
there's, there's a, they participate pretty in some
cases, in a fairly robust way,in due diligence. In the M and
A's context. They also are, theyalso are, in some ways, sort of
a legal outsourcing opportunity.
So if you, for example, you havea senior member of your in house
staff who is going out on leaveof some kind, FMLA leave or
(06:16):
medical leave of some kind, theycan, they will. They're very
quick to be able to to slotpeople in. They're also looking
they're also able to build up aquickly, build up a team on a
given project, and then reducethe numbers quickly after that
particular initiative or projectis over. And you know, they're
what they're what they're doingis leveraging quite a bit of
(06:40):
technology, quite a bit ofprocess management, as as you
stated earlier, Rob And therethey are. They are also
providing the attorneys andparaprofessionals who are
working with them with highlyflexible work arrangements.
Sometimes it's fully remote,sometimes it's on site,
(07:01):
sometimes it's at, you know, anaxiom, or, you know, one of the
LSPs offices. But it's veryflexible. We've seen, we've seen
also that it's been a placewhere people who have left the
active practice and want torejoin are finding that as a
pathway into rejoining thepractice, or just as a as a true
new career path. So they'reoffering some interesting
(07:23):
alternatives, both for theclients and for the
practitioners.
Rob Bata (07:27):
And I think in many ways, they've also woken up a
certain part of the legalprofession. Part of it is kind
of what you said, theoutsourcing, the kind of lawyer
on demand services. And therewas actually one called lawyers
on demand LOD, which was ownedby the old Berlin Lady pesner
firm, but after their mergerwith Brian cave, they sold it
(07:50):
off. And I think that LOD is nowfunctioning as a separate
service. I think they also, andthis is interesting from an
international point of view,they also have, I think,
promoted the growth of the socalled distributed law firm,
which is like the Fisher Broylesis of the US or the or Group W,
(08:13):
or a keystone law in the UK,where lawyers who don't really
want to be part of a firmbasically Get a hot desk and are
able to sell their servicesseparately. And, you know,
there's an aggregator involvedwho gets part of the fees. But I
think that the growth of thosekinds of practices was
accelerated by the existence ofalsps, which also performs some
(08:36):
of these kinds of lawyer ondemand services. I think that
internationally, it'sinteresting, because certainly
you look at the UK, havingstarted with the 2007 Legal
Services Act, is definitely themost liberal jurisdiction in the
world in terms of permittingoutside ownership of law firms.
(08:57):
And that goes hand in hand inmany ways, with ALS PDS, which
are not necessarily owned bylawyers or run by lawyers,
necessarily performing legalservices or or being owned or
buying into law firms. Andyou're saying a great deal of
that internationally, not somuch here in the United States
(09:19):
and in my home state of NewYork, the State Bar has
adamantly refused to consideranything like that. And and
they're, they're sort of ABArule, 5.4 to the to the 10th
power, not interested in in toomuch progress, in that they
gotta keep that, keep thatgarden walled? Well, walled.
(09:42):
Yes, indeed. So the interestingthing about ASL piece also was,
you know, how they fit in withother challenges to the legal
profession, which is, as I saidearlier, the big four. The Big
Four, interestingly enough. Um,I saw this in a in a recent
(10:03):
report, they are the slowestgrowers of alsps. So the the
captive alsps of the big fourhave only grown by about 5% in
the past five years. Part ofthat is also because the Big
Four do perform all kinds ofrisk advisory and other kind of
(10:25):
consulting services, so it's amix. But it is quite interesting
that in a survey that AltmanWeil did a little while ago, it
was shown that most law firmsand Big Four, I should say most
law firms feel that alsps Or theBig Four are not taking a lot of
(10:51):
business away from them, so onlyabout fewer than 10% of the
respondents felt that businesswas being taken away. But when
you ask them, Do you see them asa threat, right? Nearly 60% of
the respondents said, Yes, wedo. So
Unknown (11:09):
here too, the numbers, as we know, in the profession,
sometimes are a little are alittle slippery, right? And so
if only 10% are saying, well,they're taking work away, but
gosh, 50% are saying thatthey're, that they're a threat.
I I wager that there's probably,so there's probably a little
more we need to read into thosenumbers, but, but I think
you're, you're absolutely right,and we've seen, we've already
(11:30):
seen, you know, that that in incertain very restricted
contexts, PwC and Deloitte havecreated, you know, strategic
alliances. I think PwC was withfragamon, and Deloitte has an
alliance with Barry ApplemanLayton. And those are, those are
immigration firms. They're veryspecific, very specific, very
sort of narrow cast, if youwill, of what they're, what they
(11:53):
what they do, and what theybring to the market and their
strategic relationships. Butnonetheless, there they have a
very strong, very strongrelationship with with those,
those larger organizations. Sothink we're seeing them nibble a
little bit, you know, around theedges.
Rob Bata (12:11):
Yeah, I think certainly, as far as the states
are concerned, but elsewhere,too, some of the strategy has
been to take mature practiceswith declining profits. And that
really characterizes immigrationto some extent, some labor to
labor and employment. So that'swhere they've been reaching out.
But then in other jurisdictions,outside of the US you look at en
y has been very, very active inLatin America. KPMG just brought
(12:36):
in my friends at Zico law, whichis was a regional firm based in
Southeast Asia, offices inSingapore, Indonesia, the
Philippines, uh, Vietnam, allover the place and and that not
only helps the KPMG ability toput forth legal services, it
(12:58):
also takes a regional firm andputs it on a global stage. So
you can see that that's a winwin for both sides, and that was
a tremendous debt. That's morethan a 250 lawyers in that
acquisition. I don't think thatthat's going to be happening too
much in Europe just yet.
Deloitte clearly has announcedthat in the UK, they expect to
double or triple their in houselegal function, and that's going
(13:21):
to mean, I'm sure some mergersor large group moves, but but
the bottom line is that alsps,whether in a fledgling form,
competing with law firms in TheUS or in a very distinctly
aggressive and assertive formcompeting internationally, are a
(13:43):
force to be reckoned with, andthey're going beyond simply data
management or lawyers on demand.
So for example, the VincentMason firm recently brought in a
provider that is a diversity adei expert, and they have now
(14:11):
set up basically a departmentwithin pens and masons that
advises on dei issues. Buthaving brought in this risk
advisory consulting firm that'salso a kind of Alsp. So, so
you're beginning to see thosekinds of things. The other thing
that you're starting to see iswhat, when you what you need for
(14:32):
alsps is kind of a practicemanagement and financial systems
background. Many of them don'tprovide that. So there's a whole
other industry that's growing. Ijust came across a wonderful
outfit in the Netherlands calledit factor, which provides a
dashboard to track profits onrevenue. So I think that we're
(14:57):
looking at internationally andin the US is. Is a kind of a web
of new industries within thelegal industry that will
continue to sort of try toencircle traditional legal
practice, and it's something tolook out for and take into
(15:17):
account in strategic planning,
Unknown (15:19):
yeah, but yeah, it's not all doom and gloom, as we
know. I mean, I believe that lawfirms do have some distinct
advantages. And there's someadvantages that the alsps and
the Big Four all, all provide,you know, kind of one neck to
ring a variety of services, fullcycle, etc, etc. I've heard
those the way that they've beenpitching their services. But,
(15:39):
you know, law firms do have, dohave a way to to compete and to
be aware. And, you know, they'vegot to be aware that that's one
of the that's one of the theissues is to make sure that that
they are aware that thecompetition is out there and
and, you know, I think that, youknow, law firms spend a lot of
time, and I've been on the onthe preparation side and and
(16:03):
development side of hundreds ofRFP responses in my career. And,
you know, law firms, still tothis day, are leaning more into
things like pedigree andfeatures of the law firms,
rather than, you know, thebenefits and the process that
they can bring to the to thetable. And that's a you know,
that is something that has tochange, and is changing with
many firms, they are starting tolook at at, you know, how they
(16:25):
are benefiting their clients?
Also, I think that secondmentscould be a huge value add for
firms, and when they do those,those they have to be very
mindful about the secondments.
Send your best folks. I knowthere's a risk that they might,
that they might not return, butyou know what? That's okay. If
they don't return, they'regenerally speaking, going to
stay at that perch that they'rein, but make sure that when
(16:47):
they're there, you're you'rebeing very, very definitive
about why that person is there.
They're there to serve theclient. They're there to develop
relationships, and the firmshould be supporting them in
that. And I think that that's afantastic way,
Rob Bata (16:59):
and that, I think raises an interesting question,
because we want to relate thisdiscussion to the DNA of this
podcast, which I think, I thinkit relates very well. But I
wonder if you could just say afew things before we run out of
(17:19):
time about how you see themarketing department and the in
house, the in the law firm inhouse executives role in terms
of, if you will, educating lawfirm management about, on the
one hand, yes, the threatenedand the challenge, but on the
other hand, the opportunity andand the importance of working
(17:43):
with potentially developingtheir own captive alsps.
Unknown (17:47):
I think that that's an excellent point. You know, the
folks who are in my shoes, manyof them have some of those. Many
of them have JDS or advanceddegrees in in business or
marketing, and they spend asignificant amount of time
analyzing markets. I've beenanalyzing this LSP market for
(18:09):
over a decade and and I thinkthat that being able to turn to
your your in houseprofessionals, and say, to help
me understand what's going onout at the marketplace, more
than just what you're going tohear from American lawyer, or
maybe law 360 which are greatsources, but they're not the
only ones out there. There is,there is a whole, there's a
whole world of research andmarket research that can be
(18:32):
done. I also think that that thepricing professionals, the
practice managementprofessionals, should all be
part of this discussion, becausethey will, they are also
understanding what's going onout there. There's there's
groups that are looking atnothing, but operations, you
know, the clock. Clock is agreat example the operations
group. It's an internationaloperations group. We've got
(18:53):
professionals from all over theworld getting together, talking
about what's going on in house,outside, with other alsps as
well. And so there's a lot ofintelligence that that's going
on out there. And I think thatwe can also encourage our firms
to take a yes and approach to tothis. We not be fearful if you
hear that your client is talkingabout bringing in an Alsp to to
(19:15):
be part of the be part of theoverall service mix on an
initiative or a case or a deal,and make sure that you're
pointing out you know that howyou can work with them together,
and where your team is bringingin the in the value, not in a
defensive way, but just in avery positive way, and finding
ways to work with the
Rob Bata (19:32):
alsps. Sure that's it's not a zero sum game. It's
not, no, it's not, not at all.
Again, is the long term loss forthe other way around. And I
think it's also true thatthere's also room here for the
outside consultant to work withthe marketing people, to work
with in house people, but alsoto be aware as certainly, I've
tried to educate myself onwhat's out there, because it
(19:56):
also creates opportunities forLaw Firm. Firms for growth, for
greater efficiency, and, ofcourse, for greater
profitability, which is what myclients are looking for, and
that, you know, we hope todeliver. So I think that that's
that's a great topic for us tosign off on, and I hope that was
helpful
Unknown (20:20):
for our listeners.
Well, we can't stop yet. Rob, westill have Bata best bet, which,
which is, which is still myfavorite part of all of our, all
of our opportunities that we getto, get to be online together.
So what is Bata is best bet?
Well, behind me
Rob Bata (20:41):
right now, of course, there are many interesting
areas. And you know, the lastpodcast I talked about Southeast
Asia and particularly Singapore.
To me, what's interesting rightnow is this isn't world beating,
but it's popped up. And I thinkit's beginning to show up on
people's screens, and that's theMiddle East, and in particular,
(21:03):
Saudi Arabia. Yeah, we've seensome movement there. It sounds
like it, at least it wasreported that Kirkland analysis
looking to set up there. Just togive a little background, the
Saudi government has hassomewhat liberalized the role of
foreign lawyers and what theycan do, they are now able to
(21:24):
form either, either have abranch office, or they can have
a an actual practice there,where they can practice Saudi
law. There's certainrequirements, but this is all
new. And of course, all of thisis on the back of the Saudi
vision, 2030 project, where theyhope to generate a tremendous
amount of foreign investment tokind of wean themselves off a
(21:48):
little bit of the commoditiesbased economy. And they've
actually been doing a prettygood, a pretty good job of that.
I'll just say very briefly thatthe plan was to to go from say,
what? In one when this wholething started, vision in 2030
they had about $43 billion worthof foreign direct investment
(22:12):
that was not related to oilcoming into the country. The
goal is to get to a little over100 billion, and they're already
at at considerably more than atconsiderably more than they
started out at their 267billion. So it's working, and I
think it's going to attractinvestment. And obviously there
(22:35):
are certain glitches and issuesto think about there, but I do
think Saudi Arabia is kind ofhot, and because of that, the
rest of the Gulf will be too,and as Abu Dhabi and and Dubai
will continue to attractinterest. So that's that's my
best for now. If
Unknown (22:52):
anybody out there has questions about about how to get
into those markets, please givemister Bata a call. So thank
you, everybody for tuning in,and if you have any questions,
thoughts, ideas that you'd liketo hear us address on this
podcast, We're all ears and Robas always. Great to Great to see
you and and thanks again for forfor coming up with a great idea
(23:16):
to put this podcast together.
Rob Bata (23:19):
Likewise, it's a joint project, and real pleasure to
work with you. Murray, ohgoodbye. Everyone bye, everyone
bye, you.
Robert, welcome to GMT, the podcast for globally minded
(00:05):
law firm leaders with your host.
Robert Bata, principal ofWarwick place legal and Murray
Coffey, principal of M Coffey,between them, Rob and Murray
have about three quarters of acentury's experience working
with some of the most notablelaw firms on the planet. This
podcast is designed to helpthose law firm leaders tasked
with growth make great decisionsabout whether and how to
(00:28):
implement cross border expansionfor their firms and what it
takes to succeed. And now. RobBata
Rob Bata (00:42):
Hi Murray. We're back for the second session of our
podcast. That's great to seeyou. Great to be with you,
absolutely. And this time we'regoing to be talking about ALS
fees, or alternative legalservices providers and what they
mean for the legal profession.
We're not going to have atremendous number of predictions
or talk about a lot ofphilosophy, but just about how
(01:05):
it all fits into what'shappening with the legal
industry around the world. Manyalsps have been on the market
for a long time now. They'veshown extraordinary growth, and
I think that it's time, ifpeople have not paid attention
to them, it's time for law firmsto pay much more attention. Of
(01:29):
course, many are because theyhave their own captive alsps.
The one thing that I would liketo say, and I'm going to turn it
over to you, Murray, is that Igave a I gave a lecture to the
Israel Bar Association aboutfive years ago or so, and at
that point, alsps were an $8.4billion business. Today they're
(01:49):
$21 billion business. So thatthat's a more than a 45%
increase in terms of compoundedannual growth rate, and that
really does mean something. It'salso true that law firms own
(02:10):
some of their alsps, thesecaptives, as they're known,
they've increased 6% not 6% sixtimes over the past five years.
So it's something to think aboutand pay attention to.
Unknown (02:26):
Yeah, and, and, and I'll add before we start, we're
both. We are both broadcastingfrom the great state of Texas on
this I'm in Dallas, and Rob isin beautiful Austin, Texas on
the sunny day February. Yeah,Rob. I mean, the, I think this
started out as a conversationbetween you and I about the news
a couple weeks back, about oneof the first mover, or one of
(02:50):
the early movers in the Alspworld, axiom starting up their
own law firm. They're actually,they're actually creating their
own law firm in Arizona.
Arizona, as you know, is one ofthe jurisdictions that has set
aside ABA Rule 5.4 which hashistorically mandated that
ownership of law firms, lawfirms gonna cannot be non
(03:12):
attorney ownership of law firmsor participation in the profits.
And Arizona set that aside. Acouple of other jurisdictions
are looking at it andexperimenting with it, and
certainly we've seen it in thein the cross border context with
which I know you're going totalk about, kind of what, what
that Alsp, what the en y, PwC,KPMG, legal departments, sort of
(03:34):
what those look like in terms ofcompetition, but axioms formed
axiom advice and counsel inArizona, they're focusing on
some, you know, some, somereally strong areas of the law,
areas of the law that thatrequire a great deal of
efficiency and also require asignificant amount of people
power to, you know, get these,get these pushed over the over
(03:56):
the finish line. And so it is aninteresting development. We'll
see what happens. They haveplenty of resources, both in
terms of funding and in terms ofcapabilities that they're going
to be able to apply to this.
Then we'll see where it goes. Ijust started, you know, they've
got a they've they're, they'regrowing quickly, as all these
(04:18):
alsps are and and I think it'sgoing to be an interesting
development for the law firms,as they're looking at this as
its competition. And as yousaid, we've got some firms that
have captive alsps, and we'veall we're also seeing strategic
partnerships. But I think that,I think that you know where
we've seen some of this, some ofthis, these alternatives to law
(04:41):
firms, if you will, pop up havebeen in initially, early on in
the global context, and we'restill seeing that. So maybe you
can talk a little bit about sortwhat your experience has been.
Rob with seeing some of these,this in the global context, and
what it's done to thecompetition
Rob Bata (04:57):
and all. Murray, I think it would be interesting.
Interesting, also foreverybody's understanding, just
to understand, really what thesealsps do, because at this point,
as sophisticated as some of themare, they're not just a
replication of a law firm,correct. They bring a certain
(05:18):
capability, which is casemanagement and and legal process
and so forth. So when we talkabout axiom, for example,
starting up a law firm that's alittle bit different from the
from the classic Alsp. Can yougive a little bit more, put a
little bit more flesh on whatalsps actually do in terms of
(05:40):
their function. They're not theones that do enormous merge
acquisitions, although they dohandle much of if you will, the
back office. Part of that, yeah,
Unknown (05:53):
there's, there's a, they participate pretty in some
cases, in a fairly robust way,in due diligence. In the M and
A's context. They also are, theyalso are, in some ways, sort of
a legal outsourcing opportunity.
So if you, for example, you havea senior member of your in house
staff who is going out on leaveof some kind, FMLA leave or
(06:16):
medical leave of some kind, theycan, they will. They're very
quick to be able to to slotpeople in. They're also looking
they're also able to build up aquickly, build up a team on a
given project, and then reducethe numbers quickly after that
particular initiative or projectis over. And you know, they're
what they're what they're doingis leveraging quite a bit of
(06:40):
technology, quite a bit ofprocess management, as as you
stated earlier, Rob And therethey are. They are also
providing the attorneys andparaprofessionals who are
working with them with highlyflexible work arrangements.
Sometimes it's fully remote,sometimes it's on site,
(07:01):
sometimes it's at, you know, anaxiom, or, you know, one of the
LSPs offices. But it's veryflexible. We've seen, we've seen
also that it's been a placewhere people who have left the
active practice and want torejoin are finding that as a
pathway into rejoining thepractice, or just as a as a true
new career path. So they'reoffering some interesting
(07:23):
alternatives, both for theclients and for the
practitioners.
Rob Bata (07:27):
And I think in many ways, they've also woken up a
certain part of the legalprofession. Part of it is kind
of what you said, theoutsourcing, the kind of lawyer
on demand services. And therewas actually one called lawyers
on demand LOD, which was ownedby the old Berlin Lady pesner
firm, but after their mergerwith Brian cave, they sold it
(07:50):
off. And I think that LOD is nowfunctioning as a separate
service. I think they also, andthis is interesting from an
international point of view,they also have, I think,
promoted the growth of the socalled distributed law firm,
which is like the Fisher Broylesis of the US or the or Group W,
(08:13):
or a keystone law in the UK,where lawyers who don't really
want to be part of a firmbasically Get a hot desk and are
able to sell their servicesseparately. And, you know,
there's an aggregator involvedwho gets part of the fees. But I
think that the growth of thosekinds of practices was
accelerated by the existence ofalsps, which also performs some
(08:36):
of these kinds of lawyer ondemand services. I think that
internationally, it'sinteresting, because certainly
you look at the UK, havingstarted with the 2007 Legal
Services Act, is definitely themost liberal jurisdiction in the
world in terms of permittingoutside ownership of law firms.
(08:57):
And that goes hand in hand inmany ways, with ALS PDS, which
are not necessarily owned bylawyers or run by lawyers,
necessarily performing legalservices or or being owned or
buying into law firms. Andyou're saying a great deal of
that internationally, not somuch here in the United States
(09:19):
and in my home state of NewYork, the State Bar has
adamantly refused to consideranything like that. And and
they're, they're sort of ABArule, 5.4 to the to the 10th
power, not interested in in toomuch progress, in that they
gotta keep that, keep thatgarden walled? Well, walled.
(09:42):
Yes, indeed. So the interestingthing about ASL piece also was,
you know, how they fit in withother challenges to the legal
profession, which is, as I saidearlier, the big four. The Big
Four, interestingly enough. Um,I saw this in a in a recent
(10:03):
report, they are the slowestgrowers of alsps. So the the
captive alsps of the big fourhave only grown by about 5% in
the past five years. Part ofthat is also because the Big
Four do perform all kinds ofrisk advisory and other kind of
(10:25):
consulting services, so it's amix. But it is quite interesting
that in a survey that AltmanWeil did a little while ago, it
was shown that most law firmsand Big Four, I should say most
law firms feel that alsps Or theBig Four are not taking a lot of
(10:51):
business away from them, so onlyabout fewer than 10% of the
respondents felt that businesswas being taken away. But when
you ask them, Do you see them asa threat, right? Nearly 60% of
the respondents said, Yes, wedo. So
Unknown (11:09):
here too, the numbers, as we know, in the profession,
sometimes are a little are alittle slippery, right? And so
if only 10% are saying, well,they're taking work away, but
gosh, 50% are saying thatthey're, that they're a threat.
I I wager that there's probably,so there's probably a little
more we need to read into thosenumbers, but, but I think
you're, you're absolutely right,and we've seen, we've already
(11:30):
seen, you know, that that in incertain very restricted
contexts, PwC and Deloitte havecreated, you know, strategic
alliances. I think PwC was withfragamon, and Deloitte has an
alliance with Barry ApplemanLayton. And those are, those are
immigration firms. They're veryspecific, very specific, very
sort of narrow cast, if youwill, of what they're, what they
(11:53):
what they do, and what theybring to the market and their
strategic relationships. Butnonetheless, there they have a
very strong, very strongrelationship with with those,
those larger organizations. Sothink we're seeing them nibble a
little bit, you know, around theedges.
Rob Bata (12:11):
Yeah, I think certainly, as far as the states
are concerned, but elsewhere,too, some of the strategy has
been to take mature practiceswith declining profits. And that
really characterizes immigrationto some extent, some labor to
labor and employment. So that'swhere they've been reaching out.
But then in other jurisdictions,outside of the US you look at en
y has been very, very active inLatin America. KPMG just brought
(12:36):
in my friends at Zico law, whichis was a regional firm based in
Southeast Asia, offices inSingapore, Indonesia, the
Philippines, uh, Vietnam, allover the place and and that not
only helps the KPMG ability toput forth legal services, it
(12:58):
also takes a regional firm andputs it on a global stage. So
you can see that that's a winwin for both sides, and that was
a tremendous debt. That's morethan a 250 lawyers in that
acquisition. I don't think thatthat's going to be happening too
much in Europe just yet.
Deloitte clearly has announcedthat in the UK, they expect to
double or triple their in houselegal function, and that's going
(13:21):
to mean, I'm sure some mergersor large group moves, but but
the bottom line is that alsps,whether in a fledgling form,
competing with law firms in TheUS or in a very distinctly
aggressive and assertive formcompeting internationally, are a
(13:43):
force to be reckoned with, andthey're going beyond simply data
management or lawyers on demand.
So for example, the VincentMason firm recently brought in a
provider that is a diversity adei expert, and they have now
(14:11):
set up basically a departmentwithin pens and masons that
advises on dei issues. Buthaving brought in this risk
advisory consulting firm that'salso a kind of Alsp. So, so
you're beginning to see thosekinds of things. The other thing
that you're starting to see iswhat, when you what you need for
(14:32):
alsps is kind of a practicemanagement and financial systems
background. Many of them don'tprovide that. So there's a whole
other industry that's growing. Ijust came across a wonderful
outfit in the Netherlands calledit factor, which provides a
dashboard to track profits onrevenue. So I think that we're
(14:57):
looking at internationally andin the US is. Is a kind of a web
of new industries within thelegal industry that will
continue to sort of try toencircle traditional legal
practice, and it's something tolook out for and take into
(15:17):
account in strategic planning,
Unknown (15:19):
yeah, but yeah, it's not all doom and gloom, as we
know. I mean, I believe that lawfirms do have some distinct
advantages. And there's someadvantages that the alsps and
the Big Four all, all provide,you know, kind of one neck to
ring a variety of services, fullcycle, etc, etc. I've heard
those the way that they've beenpitching their services. But,
(15:39):
you know, law firms do have, dohave a way to to compete and to
be aware. And, you know, they'vegot to be aware that that's one
of the that's one of the theissues is to make sure that that
they are aware that thecompetition is out there and
and, you know, I think that, youknow, law firms spend a lot of
time, and I've been on the onthe preparation side and and
(16:03):
development side of hundreds ofRFP responses in my career. And,
you know, law firms, still tothis day, are leaning more into
things like pedigree andfeatures of the law firms,
rather than, you know, thebenefits and the process that
they can bring to the to thetable. And that's a you know,
that is something that has tochange, and is changing with
many firms, they are starting tolook at at, you know, how they
(16:25):
are benefiting their clients?
Also, I think that secondmentscould be a huge value add for
firms, and when they do those,those they have to be very
mindful about the secondments.
Send your best folks. I knowthere's a risk that they might,
that they might not return, butyou know what? That's okay. If
they don't return, they'regenerally speaking, going to
stay at that perch that they'rein, but make sure that when
(16:47):
they're there, you're you'rebeing very, very definitive
about why that person is there.
They're there to serve theclient. They're there to develop
relationships, and the firmshould be supporting them in
that. And I think that that's afantastic way,
Rob Bata (16:59):
and that, I think raises an interesting question,
because we want to relate thisdiscussion to the DNA of this
podcast, which I think, I thinkit relates very well. But I
wonder if you could just say afew things before we run out of
(17:19):
time about how you see themarketing department and the in
house, the in the law firm inhouse executives role in terms
of, if you will, educating lawfirm management about, on the
one hand, yes, the threatenedand the challenge, but on the
other hand, the opportunity andand the importance of working
(17:43):
with potentially developingtheir own captive alsps.
Unknown (17:47):
I think that that's an excellent point. You know, the
folks who are in my shoes, manyof them have some of those. Many
of them have JDS or advanceddegrees in in business or
marketing, and they spend asignificant amount of time
analyzing markets. I've beenanalyzing this LSP market for
(18:09):
over a decade and and I thinkthat that being able to turn to
your your in houseprofessionals, and say, to help
me understand what's going onout at the marketplace, more
than just what you're going tohear from American lawyer, or
maybe law 360 which are greatsources, but they're not the
only ones out there. There is,there is a whole, there's a
whole world of research andmarket research that can be
(18:32):
done. I also think that that thepricing professionals, the
practice managementprofessionals, should all be
part of this discussion, becausethey will, they are also
understanding what's going onout there. There's there's
groups that are looking atnothing, but operations, you
know, the clock. Clock is agreat example the operations
group. It's an internationaloperations group. We've got
(18:53):
professionals from all over theworld getting together, talking
about what's going on in house,outside, with other alsps as
well. And so there's a lot ofintelligence that that's going
on out there. And I think thatwe can also encourage our firms
to take a yes and approach to tothis. We not be fearful if you
hear that your client is talkingabout bringing in an Alsp to to
(19:15):
be part of the be part of theoverall service mix on an
initiative or a case or a deal,and make sure that you're
pointing out you know that howyou can work with them together,
and where your team is bringingin the in the value, not in a
defensive way, but just in avery positive way, and finding
ways to work with the
Rob Bata (19:32):
alsps. Sure that's it's not a zero sum game. It's
not, no, it's not, not at all.
Again, is the long term loss forthe other way around. And I
think it's also true thatthere's also room here for the
outside consultant to work withthe marketing people, to work
with in house people, but alsoto be aware as certainly, I've
tried to educate myself onwhat's out there, because it
(19:56):
also creates opportunities forLaw Firm. Firms for growth, for
greater efficiency, and, ofcourse, for greater
profitability, which is what myclients are looking for, and
that, you know, we hope todeliver. So I think that that's
that's a great topic for us tosign off on, and I hope that was
helpful
Unknown (20:20):
for our listeners.
Well, we can't stop yet. Rob, westill have Bata best bet, which,
which is, which is still myfavorite part of all of our, all
of our opportunities that we getto, get to be online together.
So what is Bata is best bet?
Well, behind me
Rob Bata (20:41):
right now, of course, there are many interesting
areas. And you know, the lastpodcast I talked about Southeast
Asia and particularly Singapore.
To me, what's interesting rightnow is this isn't world beating,
but it's popped up. And I thinkit's beginning to show up on
people's screens, and that's theMiddle East, and in particular,
(21:03):
Saudi Arabia. Yeah, we've seensome movement there. It sounds
like it, at least it wasreported that Kirkland analysis
looking to set up there. Just togive a little background, the
Saudi government has hassomewhat liberalized the role of
foreign lawyers and what theycan do, they are now able to
(21:24):
form either, either have abranch office, or they can have
a an actual practice there,where they can practice Saudi
law. There's certainrequirements, but this is all
new. And of course, all of thisis on the back of the Saudi
vision, 2030 project, where theyhope to generate a tremendous
amount of foreign investment tokind of wean themselves off a
(21:48):
little bit of the commoditiesbased economy. And they've
actually been doing a prettygood, a pretty good job of that.
I'll just say very briefly thatthe plan was to to go from say,
what? In one when this wholething started, vision in 2030
they had about $43 billion worthof foreign direct investment
(22:12):
that was not related to oilcoming into the country. The
goal is to get to a little over100 billion, and they're already
at at considerably more than atconsiderably more than they
started out at their 267billion. So it's working, and I
think it's going to attractinvestment. And obviously there
(22:35):
are certain glitches and issuesto think about there, but I do
think Saudi Arabia is kind ofhot, and because of that, the
rest of the Gulf will be too,and as Abu Dhabi and and Dubai
will continue to attractinterest. So that's that's my
best for now. If
Unknown (22:52):
anybody out there has questions about about how to get
into those markets, please givemister Bata a call. So thank
you, everybody for tuning in,and if you have any questions,
thoughts, ideas that you'd liketo hear us address on this
podcast, We're all ears and Robas always. Great to Great to see
you and and thanks again for forfor coming up with a great idea
(23:16):
to put this podcast together.
Rob Bata (23:19):
Likewise, it's a joint project, and real pleasure to
work with you. Murray, ohgoodbye. Everyone bye, everyone
bye, you.
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