Daniel, you are the co-founder of Lexoo. I am sure many people in the UK know about your activities. But for those who don’t what is Lexoo?
Based in London, Lexoo is Europe’s largest curated legal marketplace. Lexoo enables business of all sizes (SMEs up to in-house legal teams) to access a global panel of over 300 ex-big firm senior associates and partners who now operate on a low-overhead basis, saving over 50% on equivalent larger firm rates. Lexoo rigorously vets the lawyers on its panel and accepts only a small minority of applications. Although we started out in the UK, we now have lawyers all over the world, who are all ready to quote competitive fixed fees and are happy to be reviewed after completing a job.
Before starting Lexoo I worked as a senior associate at De Brauw. During my time as a lawyer I noticed that most firms still operate antiquated business models, based on the billable hour. This isn’t great for clients (very unpredictable and substantial legal bills), but also isn’t particularly fun for lawyers - I certainly never enjoyed accounting for my time in 6 minute increments! In addition, I noticed that an increasing number of senior lawyers left larger law firms for lifestyle reasons. That meant that there was a growing group of high quality lawyers entering the marketplace, all willing to work on a lower overhead basis. That inspired me to start Lexoo, to offer businesses and in-house legal teams easy access to this relatively new resource of independent high quality lawyers.
Looking at your legal network, do you target small, medium and big law and is there a difference in product and service needs between small, medium and big law?
We primarily target independent or boutique law firms to join the platform. We’ve noticed that they are more willing to be flexible and quote fixed fees, and their operating model of low overheads fits better with our philosophy. Having said that, we do have a handful of large firms on our books as well. Certain jobs simply require a larger firm to quote, so we are read for that. The larger firms do still ‘play by our rules’. They have to be transparent on fees and who will complete the work (i.e. if it’s an associate instead of the partner, this should be clear up front), and they are equally subject to be reviewed by their clients.
On the client side, we assist clients of all sizes. For example, on any given day we might assist small shop owners who need their commercial lease reviewed, but at the same time also work with the general counsel of a multinational to get quotes from specialised lawyers for a cross border legal matter. The benefit of having a large global network of lawyers, is that we can (almost) always provide the right lawyers for a given matter. For every assignment we handpick 3-4 lawyers who we feel are the best fit, and only ask them to quote. This way there’s no risk of a lawyer quoting for a matter for which they don’t have the right expertise.
You offer several services. Looking in to these services, what are they and are you planning to introduce other services?
We currently focus primarily on assisting businesses with finding the right external lawyer for a transaction, which could be a contract review, an acquisition, a piece of advice, or any other job for which a company might wish to instruct an external lawyer. However, recently we’ve also started helping in-house legal teams who need e.g. a maternity leave cover.
For example, we recently placed a freelance lawyer as a temporary head of legal for an Oil & Gas company. We envisage continuing to offer those services.
At present you’re active in the UK – what plans, if any, do you have for further growth in Europe and maybe the US and the Asia-Pacific region?
Although most of our marketing and sales take place in the UK, our lawyer network is now no longer limited to the UK. We started on boarding lawyers wherever our clients required it. For example, an in-house lawyer might contact us saying they need a corporate lawyer
based in New Zealand. If we don’t have corporate lawyers in a given jurisdiction on our panel our Legal Network Director will invest time in finding the right lawyers then and there. That way, we’ll have the right lawyers for the future.
Prior to joining Lexoo, our Legal Network Director spent over 10 years at Linklaters. Half of that as an associate, the other half as COO for India and Africa. Essentially she was responsible for creating partnerships with law firms in jurisdictions where Linklaters didn’t have their own office. She’s now using those same skills to locate and onboard the right lawyers for Lexoo. In the future we anticipate we’ll start marketing directly to businesses in other countries as well. Currently our non-UK clients typically find us through word of mouth.
Looking from a competitive view, are you expecting new entries that offer the same services and how do you act on new entries?
Any great idea will bring competition - so that’s not to be feared! Although to be honest, we have a great head start (at least in Europe). There are some competitors in the US with similar traction. In reality though, the true competition is with traditional law firms.
In terms of global legal spend, the majority of businesses still work with traditional law firms, and it’s that trend we’re working on changing. I feel the New Law/Legal Tech market is still very much at the stage where “a rising tide lifts all the boats”.
Lexoo can be seen as a disrupter in the traditional legal workflow, do you expect other disruptive initiatives and what are they?
I’d say Lexoo’s main innovation is enabling lawyers who actually provide the advice to step outside the high overheads of a traditional firm and practice law on their own terms. In that sense, we’re riding the ‘gig economy’ wave which has already been playing out in the wider economy for some time.
I’d say the other potentially disruptive trend in the legal market which other companies are working on is the potential for AI and machine learning to take over some of the jobs currently being done by lawyers. This is an area we’re following with interest although in fairness we’re not currently active in this field ourselves.
There is a lot of discussion ongoing about disruption in the legal market: a big bang against incremental change. What are your thoughts on this?
I find this a fascinating question. On the one hand, other industries have had similar moments where things all of a sudden moved extremely quickly and the pace of change in the legal market has noticeably increased during the last 5 years. On the other hand, the legal market has traditionally been so slow to change and there have been many moments in the last 15 years where the “end of lawyers” was announced that I’m slightly sceptical. I think ultimately, it’s more likely that the legal market as a whole will change incrementally, I firmly don’t believe that there won’t be a need for lawyers in 10-15 years like some other commentators predict. I do think though that there could be quite a disruptive change to the playing field for mid market law firms. In other words, traditional law firms who find it hard to be nimble, have all kinds of legacy software systems and practices, high overheads and expensive offices, without the reputation to justify it could be in trouble.
There will always be room in the market for a few truly elite firms. The type of firm a company would turn to if they are in unchartered territory or a “bet the company” scenario. For everything else, it will make sense to hire independent specialist lawyers though platforms like Lexoo. In that sense, a lot can change in 10 years. I think it was Bill Gates who said that people usually over estimated the change that can take place in a year, but underestimated the massive change that can happen in 10 years.
Looking at the changing market, do you think there is a difference between the US and European legal startup market? And how do you see the Asia Pacific region in this context?
I think until 3-5 years ago the US legal startup market was ahead of the UK. The US started to innovate earlier, with companies like LegalZoom and the US has many more investors willing to take a risk and fund new startups. However, the regulatory climate in the UK is much better for legal tech. As an example, English lawyers are permitted to share a portion of their fees with platforms like Lexoo, this is not permitted in the majority of non-UK jurisdictions, including the US. When it comes to the Asia Pacific region, were seeing quite a few interesting startups come out of there. Although very few are making the jump over to Europe/US. Although in fairness, the same could be said for US and European legal tech startups!
Any advice for the young legal professionals or aspiring legal entrepreneurs about starting company and working for a legal startup?
I would thoroughly recommend it. As legal professionals we sometimes err on the side of caution. Perhaps it’s because we’re often paid to analyse risk instead of opportunity. When you start a company from scratch the learning curve is quite substantial. You’re constantly pushed outside of your comfort zone, which is great for your personal growth. I’d also say there’s no real reason not to try it, even if you find out it’s not for you, you’ll have learned lots of valuable commercial skills which will be valuable even if you go back to practising law.
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