Lines Between Legal Businesses Blur – Law Firm as LPO – Radiant Law
To be sure, many large firms have opened low cost service centers. Just this week, for example, Hogan Lovells announced a low-cost legal support center in Birmingham, England.
Radiant’s announcement is newsworthy because it has only seven lawyers; I am not aware of other small firms that have opened their own offshore centers. This move suggests that the line between pure law firms and legal support services continue to blur.
For more insight into Radiant’s announcement, read a letter from founder Alex Hamilton to some of his North American friends. In reproducing it (with permission), I have bolded the portions I find most interesting and highlight here my key takeaways:
- Emphasis on managed legal services
- Insourcing work previously outsourced to legal process outsourcing (LPO) providers
- Providing a lower cost yet reliable means for big companies to manage contracts
- Becoming an Alternative Business Structure (ABS) not to raise money but to enable Radiant to hire talented professionals who are not lawyers. (Under UK law, an ABS is a law firm with outside owners.)
- The hint that Radiant has an interest in the North America market.
This announcement confirms my previous suggestions that law firms are adopting LPO approaches and LPOs are now just one of many players in a diverse legal ecosystem. [See, respectively, The Impact of Legal Process Outsourcing (LPO) You Might Not Have Noticed (Law Practice Today, January 2012 ) and Legal Process Outsourcing (LPO) – Now Just Part of the Legal Landscape (Legal Efficiency supplement to the The Times of London, 11 June 2013).]
With Radiant’s move, the lines blur further. Established LPOs such as Integreon, Pangea3, and United Lex as well as Axiom offer managed contract services. Now we have an actual law firm doing so, using the same approach as these competitors. I assume the market will leave room for multiple approaches. I quote here at length because in a time of change, hearing directly from the change agents provides insight.
[Update, 1330 EST: Alex has posted his 2009 memo to Latham & Watkins management on Innovation Opportunities – a long but interesting read. And perhaps context for what Radiant Law is doing.]
Here is what Alex wrote in his letter (email):
“Radiant has been on a hell of journey over the last year. I woke up at the beginning of 2013 in fear that we would miss the boat – that we had made great strides but we hadn’t truly followed through on the potential of our New Law model. Today we are in a very different place.
Our story is really about lawyers changing. We started as a group of partners who knew that there could be a better way, had ideas about how to fix it, but also knew that we didn’t know most of the answers. The fixed fee model for big deals has worked well, and will continue to thrive, but what we have discovered (and helped create) is the new market space (that a number of players are iterating towards) of managed legal services. We are truly in that space now and I believe we are unique by arriving here with the DNA of lawyers who have seen the inside of big law, are exasperated with the legal market, but still believe that lawyers have something valuable to contribute. That judgement matters.
The Radiant lawyers have been on journeys of personal change too. I have had to go through the eye of the needle to move from being a lawyer to a CEO. This has happened throughout the team – partners have transformed to be sales directors or operational heads conversant with lean six sigma. I even learnt to program (badly!). We have also transformed by following through as a company: all of us are on salaries, bonuses and shares now – there is no more draining of the reserves at the year end. We all know that we are going to have to grow into our new roles, but the challenge feels good.
As part of this transformation, we launched our Cape Town office on Monday, insourcing the work that we used to give to LPOs to support our high volume work that we do for major corporates. We are doing this because this has now become a core activity for us. The managed legal services market is rocketing – we had three meetings today with huge global companies/banks who need to refocus their internal resources on the strategic work and want to get rid (safely) of commercial contracting. They need a managed legal solution. We believe the term “managed” is as important as “legal”. That this is about taming a poorly performed activity that is the life-blood of companies (especially as we enter the new networked world) and is about empowering companies to focus on what is strategic, as well as getting so much more from their commercial relationships.
There is, of course (!), more going on.. We have applied to be an ABS, not because we want external money (at this stage) but because to deliver the new world, we need skills from outside the law. As soon as we are granted ABS status we will appoint Greg Tufnell as an non-exec Chair. Greg used to be the MD of major fashion retail companies Mothercare and the Burton Group. We appointed Greg, because of his business acumen, because he is the antithesis of a lawyer, and because he is incredibly good fun. We have also added more depth to our outsourcing team – someone has to do the work as I gallivant around being CEO! Further appointments will follow. Oh, and a new website goes up tomorrow.
I am writing to you all, not only because I want you to know that there is a rocket ship in the UK that is taking off, but because you have all been major influencers, friends and supporters in our journey so far. I want to truly thank you and I look forwards to seeing you all soon – I’m going to be in North America real often.” [Emphasis added]
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