Hello, and welcome back to the Big Law Business column, written by me, Roy Strom. Today we talk with Liam Brown, chair of Elevate Services, about his long-term view of competition between law firms, law companies and, ultimately, the Big Four.
Last month, I wrote that Big Law’s summer job seemed to be launching new business lines to compete for repetitive, technology-driven work often handled by so-called “alternative” legal service providers.
Greenberg Traurig, Eversheds Sutherland and Bryan Cave Leighton Paisner rolled out New Law competitors within three weeks of each other. That frenzy kicked off less than a month after Elevate Services—now considered, I guess, a more traditional ALSP—signaled its success by raising $25 million and announcing it was aiming for an initial public offering by 2021.
I was eager to discuss this summer’s shake-up with Liam Brown, Elevate’s founder and executive chair, who was in Chicago this week for a presentation at Chicago-Kent College of Law. His presentation argued that “alternative” service providers are now mainstream.
But he also waded into a question I planned to ask him: Is Elevate competing with law firms to provide these new service lines, or is it a compliment to those efforts?
On stage, he said Elevate competes with “a handful” of “vertically integrated” law firms plus the Big Four and other “law companies"— his preferred term for the likes of Elevate. But he also finished his speech with this: “We are not going away, which is good news for law firms because law companies exist to compliment what they do in a way that makes law better.”
After the presentation, we sat down and I asked him whether those two ideas were in conflict. His answer was that it was not such a binary question in real life. Some law firms will see Elevate’s services as a way to provide clients with new solutions. Other firms will try to build those capabilities on their own. Still more won’t even need these types of offerings: Their clients aren’t asking for them.
To illustrate his point that law firms are a “heterogeneous, unevenly distributed set of perspectives” (the man has a way with words), Brown told a story about working at legal process outsourcer Integreon more than a decade ago. The company, which Brown founded, had helped Clifford Chance build a service center in Delhi, India. Three years later, Integreon turned to Clifford Chance for legal advice on fundraising. When the term sheet came and the bill for legal fees was higher than Brown anticipated, he asked where the diligence work was being handled.
“The response I got was, ‘Well, in Canary Wharf,’” Brown said. “And I said, ‘Hang on a second, they could do this in their alternative delivery center that we built for them and that we know works really well. And that was a real moment for me. The partner in that particular firm, for whatever set of reasons, had just chosen not to work in this different way. And that was an example of [how] some partners did; some partners didn’t; and others just don’t care.”
He added, “For me, it’s not black and white. It’s not binary: We are their competitor or their best friend.”
I tried to press him a bit by posing a hypothetical: Imagine a world where every law firm operates an Elevate-like service. What is his company’s role then?
Brown said the biggest effect would be increased efficiency at law firms. They will realize that not all of the work they do is on bet-the-company matters that need to be handled by top talent, Brown said. He estimates that between 50% and 80% of today’s legal work can be handled by companies like Elevate.
“So if all law firms went to that state—they all have now built significant alternative capabilities—we think what that would do is drive this awareness that, ‘Oh wow, this isn’t all rocket science,’” Brown said. “Some of it is rocket science, artisanal. Most of it is actually work that can be systematized.”
Even if law firms and law companies are both competing to “systematize” work, they will each have some similarities and differences. Law firms’ talent pool will be comprised of those graduates who opt into a work environment that is more “grueling” but also far more financially rewarding than employment at a law company, Brown said.
And companies’ and firms’ capital structures will be different. Elevate will be focused on delivering long-term equity value to disparate shareholders. Law firms will still be focused on annual profit draws for partners.
One advantage Elevate will surely have over law firms in that scenario is time, according to Brown. Elevate will have spent 10 years automating as much of its workflow as possible, while most firms would be much newer to the game.
Brown didn’t seem rattled by the spate of summer ALSP launches at law firms, but he sounded more concerned about the Big Four.
“Elevate’s competition will be a world in which the Big Four have perfectly capable lawyers who are capable of going head to head with most of the Big Law firms,” he said. “They’ll have business of law capabilities head-to-head with us and automation and data science [capabilities] that are head-to-head with companies like us. Even if law firms don’t change, the Big Four are going to have an increasing role as the legal service provider to most corporations for most [business as usual] work.”
To compete in that market, Brown said his business needs to be at least a “couple hundred million” in annual revenue larger. That is why the company has pursued acquisitions at a frenetic pace, he noted. Ultimately, he said he is building an alternative to the legal business of the Big Four. He said his “elevator speech” used to compare Elevate to the consulting firm Accenture, but that is becoming obsolete.
“I think what I need to say in the elevator now is: Elevate is an alternative to the Big Four,” Brown said. “I’ve got to get rid of that ‘alternative’ tag. But you get the point.”
Worth Your Time
On the Legal App Store: Reynen Court, which has been billed as an app store for legal tech products, officially launched in beta with some serious Big Law firms giving it a test ride. The cohort includes Latham & Watkins; Clifford Chance; Paul Weiss; White & Case; and Orrick.
On Burford Capital: Burford Capital continued its response to a short-seller’s critiques last week by appointing a new chief financial officer and saying it will expand its board. The company also said there was evidence of market manipulation leading up to a Muddy Waters report accusing the litigation funder of questionable accounting. Burford’s shares were trading late Friday at about half of where they were just a month ago.
On High (Court) Bars: Big Law firms looking to launch Supreme Court practices should not overlook a broader focus on appellate work. Bloomberg Law’s Meghan Tribe and Kimberly Strawbridge Robinson report on the growing competition for SCOTUS work.
That’s all I’ve got until next time! Reach me here to share your views on law firms, law companies, litigation funders, and whatever else is happening in the world of Big Law Business.