How Big Law firms like Baker McKenzie and Polsinelli are teaming up with legal tech companies to battle increasing competition in the market


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Big Law firms are teaming up with tech companies to give them an edge in an increasingly competitive market.

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  • As more ALSPs and professional services firms are entering the legal market, law firms are looking for ways to maintain their competitive edge.
  • While some are turning inwards to develop their own in-house technology, other firms, like Baker McKenzie and Allen & Overy, are tag-teaming with legal tech companies to develop innovative solutions for contract review, litigation support, and client relationship management.
  • “We’re lawyers, not tech experts. We faced the choice of either investing in ourselves or finding a partner, and it became apparent that the answer was to find a partner we can trust,” said Jay Heidrick, an intellectual property lawyer at Polsinelli.
  • Here’s an in-depth look at four partnerships between Big Law and legal tech companies, and how they’re leveraging their respective strengths to give themselves a leg up against competitors.
  • Visit Business Insider’s homepage for more stories.

Law firms are facing mounting pressure from smaller companies offering parts of the legal process, like contract review or due diligence, and the Big Four accounting firms. As firms are jockeying to maintain their position in the industry, they’re turning toward technology as a way to give them a leg up against these competitors.

“There’s a new competitive force in town,” said Eric Laughlin, CEO of Agiloft, an enterprise software company.

Alternative legal service providers, or ALSPs, are increasingly being regarded as cheaper alternatives to the famously high billing rates of law firms, offering legal services ranging from document review to ediscovery. According to a Thomson Reuters report in 2019, the size of the ALSP market clocks in at $10.7 billion — up from $8.4 billion two years earlier — and is expected to grow 25% annually.

Meanwhile, professional services firms are also expanding their legal services, like Deloitte Legal, which offers legal management consulting to clients, and KPMG’s Global Legal Services, which describes itself as a “strategic advisor” to in-house counsel.

“As the regulatory environment becomes more liberalized” — as was the case in Arizona, which became the first state to allow nonlawyers to own law firms — you’re going to see the Big Four and ALSPs becoming bigger forces,” explained Laughlin, who also formerly led legal managed services at the accounting firm Ernst & Young.

Ultimately, it boils down to a business model decision for law firms: “They have to decide which parts of the business they want to own,” said Laughlin.

While some law firms are investing in their in-house tech, others are recognizing that their best strategy is to double down on their main asset: their lawyering skills. Recognizing a dual need to focus on delivering legal advice, while at the same time enhancing their tech capabilities, law firms are teaming up with legal tech companies to give themselves a leg up against their competitors.

Here’s a look at four partnerships between Big Law and legal tech companies, and how they’re leveraging their respective strengths to deliver innovative solutions to their clients.

Baker McKenzie and Intapp’s client relationship management system

Dan Surowiec, global chief information officer of Baker McKenzie.

Baker McKenzie


Baker McKenzie is looking toward the skies with cloud-based technology. The powerhouse law firm, which also teamed up with an AI platform this year to enhance its decision-making capabilities this year, announced in March 2019 its launch of Baker Client Intelligence, a client relationship management system it developed in collaboration with Intapp, a firm management platform for professional and financial services. 

Dan Surowiec, global chief information officer of Baker McKenzie, said that the cloud-based system has enabled the firm to boost client relationships and work. It collects basic data on client relationships — such as client contacts, meetings, and the various cases done for each client — and stores them in Intapp’s cloud system. By consolidating client information in one, easily accessible location, rather than having it spread across individual attorneys’ computers across various offices, the firm can more efficiently ensure it’s managing client relations, and assigning the best attorneys at the firm to a particular matter with a particular client.

“Cost savings hasn’t been the primary goal, but what we do gain is a lot more efficiency in utilizing people, since attorneys can now work on more value-add matters rather than figuring out logistics,” said Surowiec.

The old way of doing things at Baker was clunkier and less organized, he explained. The firm had “always struggled with” the structural aspects of managing client data. With the cloud, however, it’s able to store all the information into “a single, consolidated depository,” allowing the firm to seamlessly access and integrate data across its 77 offices around the world.

It also gives the firm a leg up against mounting competition by alternative legal service providers.

“As more ALSPs are entering into the legal market, we’re able to react to those challenges more quickly by having all the information in one place, and use the data more efficiently,” said Surowiec. “With Baker Client Intelligence, we’re aware of our client needs — hopefully even before they are. And we can come to them with potential solutions before they have that problem.” 

Boosting litigation with PolsinelliPLUS from Polsinelli and UnitedLex

Jay Heidrick, IP shareholder at Polsinelli.

Polsinelli


Am Law 100 firm Polsinelli is also boosting its in-house tech through two partnerships with UnitedLex, a legal services and data solution provider that works with corporate legal departments and law firms to help them adopt and use tech.

In addition to an IP collaboration, announced in June this year, Polsinelli launched an in-house litigation support center called PolsinelliPLUS in January, formalizing a years-long relationship with UnitedLex, which it’d previously worked with as a third-party vendor for specific matters.

Under the new partnership, 10 litigation support employees from Polsinelli were restaffed to work under UnitedLex, which has boosted the support center’s capabilities with its technology and resources, said Jay Heidrick, an IP attorney at Polsinelli. Structurally, the only thing that’s changed is who they work for: “The team is still at Polsinelli offices, interacting with the same Polsinelli attorneys. It was a very deliberate move to make sure they were still ingrained in the firm, and that our clients feel comfortable.” 

The support center collects documents and information from relevant parties in a case, processes the data, and filters out relevant documents using a proprietary software that UnitedLex has developed called Questio.

UnitedLex also provides a team of reviewers located in the US and India — usually about a dozen, though it can range up to 150 for larger government cases. By offloading the document review from associates to the vastly expanded support center, Polsinelli is able to save both attorneys time and clients money.

“I’ve always believed in doing what you know and knowing what you do,” said Heidrick. “We’re lawyers, not tech experts. We faced the choice of either investing in ourselves or finding a partner, and it became apparent that the answer was to find a partner we can trust.”

The primary advantage of the seamless integration of Polsinelli’s litigation support staff and UnitedLex’s tech resources is the streamlining of the firm’s discovery processes. “In the legal profession, repetition leads to efficiencies,” Heidrick explained. “So when you don’t have to retrain people to worry about how a client stores his information, or who the key custodians are, that leads to huge efficiencies for our client” — efficiencies that are only hypercharged with UnitedLex’s tech.

UnitedLex’s acquisition of Paul Hastings’ data science team

Tom Barnett, who formed Paul Hastings’ original DSAI team, and is now senior vice president and divisional general counsel of UnitedLex.

UnitedLex


It’s certainly been a busy year for UnitedLex. In June this year, the legal services company announced its acquisition of Am Law 100 firm Paul Hastings’s data science, analysis & investigations (DSAI) team. UnitedLex did not disclose the acquisition amount.

The team, made up of around 20 data scientists, mathematicians, and e-discovery project managers, was “incubated” in-house to help the firm’s attorneys more efficiently locate relevant documents for litigation, investigation, and employment matters, said Tom Barnett, who had formed the group at Paul Hastings. 

The team is still dedicated to working with the firm, and does similar work, continuing to “be a tech incubator at the firm, and to keep Paul Hastings with a competitive advantage,” according to Barnett.

The firm made the decision to transfer its in-house team to a third party because it had come to the conclusion that “even an innovative law firm can only go so far,” Barnett said. Paul Hastings, which recognized that it had limited resources it could invest in tech, could grow its DSAI team through a partnership with UnitedLex, instead.

Barnett said that the main change brought about by the acquisition was the boost in scalability afforded by the vast pool of resources of UnitedLex. “We went from a team of 20 to now being supported by several thousand people,” he said.

In one case involving a Department of Justice investigation of a large financial services company, the team reduced attorney review time from 2,400 hours to 80 hours, while achieving accuracy in identifying key documents at a rate 33% higher than contract attorney review. This resulted in a savings of more than 66% to the client, according to UnitedLex.

With the partnership, the DSAI team was able to develop AI technology that helps find critical information much more quickly than sifting through huge volumes of documents, and thus dramatically reduce the costs for clients. Barnett explained that while Paul Hastings already had solid tech, UnitedLex provided a wider, enhanced platform that enabled the team to boost its capabilities by integrating its existing tech with expanded innovations by UnitedLex.

Allen & Overy and Factor tackle the LIBOR transition

Chris DeConti, Factor’s head of strategy.

Factor


The collaboration between magic circle Allen & Overy and Factor, a legal solutions provider, aims to tackle the wave of contract changes surrounding the London Interbank Offered Rate, or LIBOR, which is slated to be phased out by 2021. The partnership was announced in April 2020 as the financial industry was in the midst of grappling with the upheavals caused by COVID-19.

With the transition away from LIBOR, banks and other financial institutions need to amend “millions of contracts” to remove references to LIBOR and replace them with the new rates, explained Chris DeConti, the head of strategy at Factor who led the formation of its partnership with Allen & Overy.

LIBOR has been used as the benchmark for global interest rates since the 1980s. In 2012, however, news broke that bankers had been rigging rates for years, leading the Financial Conduct Authority, the UK financial regulator, to announce in 2017 plans to eliminate LIBOR.

“Given the sheer scale of the task with the number of contracts involved, and the complexity of the workflow, where you’re negotiating back and forth between parties and clients, technology is a very important piece,” he said.

The law firm and ALSP began developing a “joint operating model” that would combine Allen & Overy’s legal expertise with the tech-powered processes created by Factor, according to DeConti. This joint model provides clients with a “seamless service across disconnected pieces,” including legal advice on how to respond to LIBOR being phased out and on the variations across different jurisdictions.

The partnership takes advantage of the respective strengths of both parties, enabling them to ramp up scale of repeatable work, like contract editing. “Law firms and companies like Factor realize they can grow more quickly and take up more market share by working together,” DeConti said. “Together, they can better leverage technology and overcome some of the things that have stood in the way of tech adoption in the legal industry more effectively.”

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