A big challenge in law is that rules vary significantly across jurisdictions. All practices – litigation, transactions, regulatory, and counselling – face this problem. That means even highly experienced lawyers often need help outside their home jurisdiction.
If countries, states, provinces, cities, agencies, and other law-makers were to adopt the same rules, then costs would drop and society would be better off. That will not happen in my life time – or yours, no matter your age. We live in a highly fragmented global legal system with much legal complexity. So we must adapt to it.
That adaption can be assisted by technology and new business models. I recently learned about one adaptation, a “point solution” that illustrates the more general principle. A “point solution” means a way to solve a narrowly defined problem.
I recently spoke with Change Board Member (CBM) founder Søren Munk Hansen, who hails from Denmark. Søren practiced M&A law at a Danish firm. After seven years, he found himself frustrated by reinventing the proverbial wheel. He saw that he would not have much chance to change how a large firm works, so he left the firm to start changeboardmember.com. He characterizes CBM as “my first step in trying to make the legal world more efficient.”
CBM has been in the works for two years and now has a seven-person team, including marketing and sales. So far, the company is self-financed.
The CBM premise is straight-forward. Even experienced European deal lawyers and counsellors do not know the mechanics of changing board members across the 20+ countries in the European Union. And board members change with some regularity for a variety of reasons, so the problem is reasonably high volume. Søren cites one deal on which he worked where two merging companies had entities in 40 jurisdictions, many of which required new board members.
I pushed a bit harder on the potential volume of business. Søren reports that there are 25 to 30 deals per week in Europe announced publicly (through various M&A-databases) that could benefit from CBM. In addition, there are presumably a similar number of relevant board member changes that are not made public until the changes have actually been executed. So, in his view, CBM does not need to achieve huge penetration to be financially successful.
The CBM website shows users how to change board members across many EU jurisdictions. The goal over time is to become a one-stop shop of how to change board members around the world. The site offers a content-based system with explanations by country. Fundamentally, it is a legal rule book focused on single task.
The interesting twist is the business model. The website has exclusive law firm referrals per jurisdiction. A CBM user could, via the site, retain co-counsel in multiple jurisdictions for the purpose of changing board members. Each participating law firm provides CBM with the static content explaining the change mechanics in its jurisdiction. Because the mechanics of changing board members often requires “feet on the street” for notaries or in-person filings, it seems likely to me that users will retain local counsel.
Søren calls CBM a content marketing platform. It gives away useful content, aspiring to cause its users to retain local counsel to help with the mechanics. This referral model means that CBM needed to have an exclusive relationship with one law firm in each country (without exclusivity, the motivation to provide content is quite limited).
I asked whether CBM might not create tension between a user and local counsel. Søren points out that even the global platform law firms lack local counsel in many countries and that many global platform law firms are still primarily being run as separate entities with a single country focus (especially when it comes to cross-border information sharing). So he does not see a business conflict.
I like the CBM idea and approach but do have some questions. I suggested that workflow to coordinate cross-jurisdiction changes could be useful. Søren said, for now, CBM is “quite analog in its approach” but that workflow is on roadmap. I’d like to see a dashboard showing the status of all my paperwork. This would require each local counsel to upload data to the site.
I also asked Søren about a growth path. He replied that if his model proves successful, growth comes from replicating it for other corporate housekeeping or regulatory issues that differ across jurisdictions. For example, the same approach could work for trademark filings.
By itself, CBM is not a legal market game changer. It does, however, illustrate a path to greater efficiency by solving point problems and then expanding that solution to similar problems. And it does show that legal innovation in Europe is happening, a proposition I occasionally doubt.
[Disclosure: I periodically discuss new products and services in my posts. When I do, as here, I rely on what company management tells me and I do not research the market for competing offerings. I typically write about products and services that I believe illustrate a more general point, so my goal is not a review but rather to explore how the legal market is changing and can become better.]