The integration of alternative legal services and law firms took another step forward this week with Axiom’s launch of its ABS, Axiom Advice & Counsel, in Arizona and news that it has been given an ABS licence to operate in England & Wales too. Axiom’s history is specifically not as a regulated law firm: it has a 20+ year history of helping legal departments identify legal talent, and that has allowed it to develop its understanding of client needs while building strong relationships with GCs and C-Suites. Its global roster of legal talent, deeply embedded with in house legal departments will give its ABS a clear route to growth, first in the US and soon to follow in England & Wales.
I blogged previously when Axiom obtained its Arizona licence, but the launch of the service now offers more transparency on strategy. We can assume similar will follow in the UK – though that is not up and running yet even though the licence is now in place.
Susskind and Eisenberg wrote in Harvard Law School’s Center on the Legal Profession magazine about how the vertical integration of alternative providers and law firms was the best route to better client services and innovation. I responded, arguing that change was happening, scale being achieved and that alternative providers were well placed to compete, including by delivering regulated legal services. Axiom is joining Elevate in having their own law firm in both the UK and US. What does it allow them to do? What is the strategy?
In the US, Axiom’s talent model only really permits it to provide lawyers to in house teams and law firms that can supervise those lawyers. Axiom does not offer legal advice or legal services and is careful not to cross regulatory lines. But now, with a US law firm, it can offer legal services to smaller and growing businesses that do not have in house lawyers to supervise the legal work. Start-ups, scaling business, emerging models across the economy often don’t have the in-house legal capacity that more established firms have. In fact many eschew the costs associated with in house teams altogether and use more flexible models for corporate functions wherever possible. These are likely to be the target clients for Axiom Advice & Counsel. Fintech, pharma, biotech, renewables, internet retail – these are just some of the opportunities to build long term relationships with growing businesses in growing sectors of the economy.
It might be tempting for US law firms to ignore this as an Arizona only move. But Arizona, like Utah (the other state to deliver regulatory reform and allow ABS) is thriving. More importantly, it is possible to serve many clients across the US from an Arizona ABS – just like New York law firms operate US-wide. Having advised Axiom and Elevate (and others such as Legal Zoom) on their Arizona ABS I am used to developing models that minimise the impact of many protectionist regulations. The opportunities that flow from Arizona are very significant for those that look deeply at the market opportunity.
To the lawyers resisting regulatory reform it is worth just highlighting the access to justice impacts of this move. Greater choice, different products and services, predictable pricing and good value for money are truly important for small businesses. These face the same access issues as individual citizens who are not well served by traditional law firms. Research in the UK has clearly highlighted the access gap for small and growing businesses. And of course it is customers that will decide if these new services are valued.
ElevateNext and Axiom Advice & Counsel are the leading examples of alternative providers moving into regulated law. I am sure that others will replicate this, albeit with different routes to market and opportunities to focus on. What about in the UK though, where the regulatory environment is more welcoming?
Much of the work that corporate clients want does not have to be done by regulated law firms, or even lawyers in England & Wales. Mergers, general corporate advice, privacy, banking law etc can all be offered outside of legal market regulation or by solicitors working in unregulated business. But clients choose law firms because of a mix of history and stickiness, risk management and quality – and being a regulated law firm can signal these things. When Axiom Advice & Counsel launches in England & Wales it will do so with good relationships with clients, a strong talent bench and a proven track record in delivering certain types of work at the quality, pace and price that clients demand. With a strong history, backed by Permira and led by talented lawyers and business people. Catherine Kemnitz, Axiom Chief Strategy & Development Officer, who led the program to develop ABS in US and UK, told me that
“Axiom has been disrupting the legal market for over twenty years and our ABS law firm is the next step in that journey. It will allow us, in the US and the UK, to do more of what our clients want, building on the deep relationships and understanding of our clients that our talent already has. We can expand the ways we deliver value to our clients, taking on more work to enable them to solve the equation of more risk to manage, more work, yet smaller budgets.”
There will no doubt be sceptics that doubt that alternative providers can offer the quality and ethical legal services of traditional law firms. But the roster of advisors at Axiom suggests differently. In Arizona they have Lynda Shely as their compliance lawyer and in England & Wales it is Iain Miller. These are two of the most respected ethics and regulatory lawyers in their respective jurisdictions. Lynda is also Chair of the ABA Standing Committee on Ethics and Professionalism, and Iain is editor of Cordery on Legal Services. They are slowly recruiting too lawyers to deliver - and have a track record of identifying top talent.
The advantage that I see for Axiom and the others is that they don’t have the barrier of law firm partners controlling sales. For genuinely bespoke work a partner lead makes sense but for the ‘run the business’ part of the market, some partners’ resistance to fixed prices, value, technology, process, pace, standardisation and non-lawyer delivery prevents law firms from utilising even the capabilities that they have built. Axiom will go to market through dedicated sales teams – people that understand the client’s needs and constraints and deploy whatever part of the Axiom toolkit, be that flexible talent, regulated lawyers or some other offer, is best suited to the problem. They will fill the gap between bespoke big law and what in house terms are well set up for.
Having cut their teeth in the legal talent business, Axiom and Elevate are moving up the value chain. They may not get to the elite litigation or bet the farm merger work but they have clear routes to growth. The only thing that is going to stop them is the Big Four – law firms will likely continue their retreat up the pyramid slowly, hiding that in the overall growth of the market and the ever higher fees that exist in a market lacking competition.
What next in the integration of law and business, or the disruption of the traditional firm? As I have said so often, change happens gradually and then suddenly. The big four are making moves to grow managed services and digital legal transformation alongside multi disciplinary legal advice, some top law firms are succeeding with their captured alternative provision and adding professional services to their offer, and external finance is coming into the US and UK legal markets to drive consolidation, integration and disruption. Only a fool predicts the future (especially before it happens) but more change is coming. Its exciting to be part of this.
You can hear Catherine Kemnitz of Axiom interviewed by Bob Ambrogi for his Law Next podcast
here.
