10 March 2016

Financial Review: Start-ups helping in-house legal teams reduce spending

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Mar 10 2016 at 5:25 PM

by Marianna Papadakis 

Brisbane is a new hot spot for legal services start-ups and these tech-bolstered companies are introducing platforms that help in-house counsel tighten their belts.

It is no doubt to the ire of big and mid-sized firms that are scrambling for work as in-house teams continue to cut their spending. But these so-called “new law” operators are compelling traditional firms to be involved lest they miss opportunities to gain and maintain clients.

Launched this week, Brisbane-based legal tech start-up Lawcadia offers web-based procurement and financial reporting tools that give companies monthly updates across all matters and encourages transparency by firms of accruing costs.

On the face of it, it sounds like established online providers such as LawAdvisor. But its founder Warwick Walsh said while other services focused on connecting consumers to lawyers, Lawcadia sought to address the lack of transparency over legal fees and billing – a top complaint among general counsel.

LawyerQuote founder Melissa Sinopoli: “In-house counsel are under costs constraints, so they are looking at external models as opposed to usual law firms for standardised matters.”

“Legal bills are very rarely what companies expect them to be, even if they are fixed or capped fees,” Mr Walsh said. “Firms offer discounts but they often make up the balance, and more, by charging for out of scope work that is not tracked very well.”

“There is equal frustration for firms because they might move out on price, knowing the one that beats them will end up charging more than was quoted,” Mr Walsh said. “Lawcadia also acts as a new sales channel for lawyers.”

Mr Walsh said the platform was now open to corporate clients in Australia, Singapore and London. It had signed up mid-sized, boutique, top-tier and international firms and was aiming to expand to Hong Kong and San Francisco.

GREATER TRANSPARENCY

Brisbane-based senior associate Melissa Sinopoli, 28, at MacDonnells Law said she set up her new start-up called LawyerQuote because of a desire by clients for greater transparency and access to comparisons of quotes for legal services.

LawyerQuote gives consumers and in-house counsel at small and medium companies instant access to fixed-fee quotes for matters ranging from employment, leasing and intellectual property, to family and criminal law, wills, conveyancing and powers of attorney.

“There are a lot of new virtual products and lawyers are more open to doing things differently; they want faster, cheaper access. That’s different to how traditional law firms have operated,” Ms Sinopoli said.

The website currently has about 70 participating firms.

Technology has facilitated a proliferation of online legal services, from broker-style clearinghouses such as Lawcadia, quoting services like LawyerQuote and secondment firms such as AdventBalance, which recently merged with London-based Lawyers on Demand, as well as Plexus and Orbit owned by Corrs Chambers Westgarth.

LEGAL PROCESS OUTSOURCING

There are also offshore legal process outsourcing (LPO) outfits that are competing for the low-level work of big firms. So much so that firms such as Herbert Smith Freehills and Baker & McKenzie have their own LPOs in Belfast. The latter firm has swollen its Belfast team from under 10 to 160 in the 12 months since opening.

Nexus Law Group is among the secondment firms, but acts more like a law firm. Unlike others its team of lawyers are independent contractors who connect with clients via a networked practice management system.

It too has a new offering called OpenLaw, which provides specialised and industry specific documents, such as in banking and finance and construction, for its clients.

“We are not joining the race to the bottom in producing these sorts of free documents, but rewarding the intellectual capital of our membership,” the head of Nexus Law Group Marcus McCarthy said.

Mr McCarthy said it was concentrating on developing better systems that attracted highly capable practitioners, yet delivered their skills at less cost.

Its lower overhead structure and universal remuneration system, which was based on direct inputs, meant clients were delivered better value and lawyers were properly rewarded, he said.

Note from Lawcadia: the final published article can be found here. Initially the article went live on afr.com with the photo of Warwick and the photo was then switched, so for the purposes of our blog we have taken the liberty of using Warwick’s  photo which was taken by Christopher Pearce at the Australian Financial Review.

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