The Rise of Legal Tech Incubators and Why Allen & Overy's 'Fuse' Has the Right Stuff
Legal tech incubators are becoming the Starbucks of the legal industry—there’s one popping up on almost every corner. Law firms, law schools, corporates, and State Bars are launching them. The ABA maintains a directory of legal incubators. The incubator craze is global--from Singapore to Spain. Many proclaim they will spawn ‘innovation,’ create ‘cutting-edge technology,’ and ‘be in the vanguard of industry change.’ The jury’s still out on the impact most incubators will have on advancing legal delivery and/or solving law’s ‘wicked problems’ like access to justice. Why? It’s not a lack of passion or commitment to improving legal delivery that will marginalize the impact of many incubators. Incubators require more than space, energy, and good intentions. That’s a start, but a successful incubator is one that focuses on specific challenges and provides resident cohorts human and technical resources, mentorship, and end-user exposure. Successful incubators require planning, focus, alignment of practice expertise with technical focus, organizational skills, and access to consumers to solve material, clearly-defined challenges.
Allen & Overy’s ‘Fuse’ Provides a Case Study for How to Launch a Legal Incubator and to Harness its Potential
Allen & Overy, the venerable Magic Circle firm, launched its incubator, ‘Fuse,’ less than a year ago. Fuse is much more than a dedicated, innovative space where a group of legal tech companies work. The initial cohort of hand-picked companies collaborates with Allen & Overy and its clients to explore, develop and test tech-enabled solutions. The firm was strategic in the selection process, concentrating on tech companies whose focus is on three principal firm practice areas ripe for digitization: (1) ‘legal tech’ -technology that supports legal advice; (2) ‘reg. tech’ -IT to support regulatory compliance; and (3) ‘deal tech’-IT that streamlines deal making. Pairing of competencies and focus between the incubator host and participants is key.
Fuse has all the necessary ingredients to succeed: (1) well-defined focus on solutions that will drive consumer impact; (2) aligned practice and tech expertise that can be leveraged reciprocally; (3) consumer buy-in and participation; (4) dedicated space; and (5) a collaborative environment that promotes an ‘everyone wins’ culture.
A&O recently issued a press release that its international banking group is deploying a new intelligent deal platform technology from Legatics, one of the initial companies selected to participate in Fuse. Little wonder A&O is already soliciting applications for its second group of incubated companies. Fuse has created an environment and culture where, by aligning the focus and interest of all stakeholders, everyone wins. Legatics has an anchor client—A&O-- and entrée to the marketplace; A&O has a technological tool that complements its practice expertise, makes it more efficient, and enhances client ‘stickiness,’ and clients have more effective legal delivery as well as internal access to the platform. The takeaway is that stakeholder alignment and collaboration are keys to building successful incubators. The same can be said of the legal delivery process.
Fuse is Part of A&O’s ‘Advanced Delivery’ Plan, The Integration of Legal Practice and Delivery of Legal Services
Fuse is not a stand-alone initiative but part of a comprehensive plan by A&O to reconfigure the way the firm pairs its ‘practice’ and ‘delivery’ capabilities. A&O describes this process as ‘advanced delivery’ an amalgam of practice expertise (‘the practice of law’), technology, and resourcing (the twin components of ‘the delivery of legal services’). Jonathan Brayne, an A&O partner and Chairman of Fuse, explained that client challenges require tech and resourcing solutions—delivery capability-- especially for a firm like A&O that engages in global practice. Five years ago, A&O began putting together the technological and resourcing elements that would enable it to provide ‘advanced delivery’ to address the explosive growth of documents and law generated by cross-border litigation and transactions and serve as a complement to its practice expertise.
A&O recognizes that not all matters-- or tasks-- require the firm’s ‘bespoke’ services and premium fees. The firm analyzed which tasks could be undertaken efficiently, cost-effectively, and in an integrated fashion by resources--human and machine—with a different pricing and qualification model and supervised by the firm or clients directly. This process—separating ‘practice’ from ‘delivery’ tasks and the structure, resources, and pricing that delivers them-- resulted in the creation of a suite of ‘right resource for the right task’ capabilities integrated under the A&O brand. The A&O delivery capabilities—staffing, project management, regulation, service center, technology, and Fuse-- can be divided into resourcing and technology. Fuse is part of the technology initiative and evidences how the firm effectively marshalled its practice capability to collaborate with tech companies—and clients—to create products that ‘move the needle’ to solve business challenges. A&O is no stranger to collaboration having previously collaborated with Deloitte to develop and market a digital derivatives compliance system called MarginMatrix. And while A&O is an outlier for creating its own suite of delivery offerings, other firms and in-house departments routinely collaborate with law companies like Elevate and the Big Four—among others—to integrate practice and delivery expertise. Many firms are launching incubators and taking other measures to leverage their practice expertise with tech companies to solve client challenges more efficiently. Meanwhile, legal operations (legal ops) teams are now common among larger corporate legal departments. Legal ops routinely collaborates with enterprise IT departments and other providers to architect ‘better, faster, cheaper’ solutions that free lawyers to work on higher-value matters.
The Pooling of Resources is Where the Market is Headed
Incubators are emblematic of a growing legal industry emphasis on collaboration. This is creating a culture clash between traditionalist lawyers that grew up in a lawyers-only (‘lawyer’ and ‘non-lawyer’), insular, proprietary, and zero-sum culture and progressives that recognize the legal industry is now supported by legal, technological, and business expertise and requires collaboration. Consumers appreciate that practice and delivery requires different skillsets, resources, structural and economic models. No provider is the best at everything, and consumers are increasingly crafting their own ‘mosaic’ of resources—internal, firm, law company, and hybrid—to handle their portfolios. This process is reshaping the contours of law firms, corporate legal departments, and law companies. Increasingly, they function as an interconnected web.
The migration of work from firms in-house is not simply cost-driven; it is part of systemic reconsideration of what is a ‘legal’ task and when, from what delivery model, and at what price point lawyers are engaged. This explains the rise of law companies like Elevate, UnitedLex, and Axiom as well as the growing influence of organizations like the Corporate Legal Operations Consortium (CLOC) and ACC Legal Operations. The industry is undergoing a fundamental reshuffling of its division of labor—a real ‘Who’s on first?’ moment. Consumers, not providers, are driving that bus, and they are increasingly insisting upon collaboration within the legal supply chain. ‘Who does what’ is a fluid exercise that, increasingly, blurs the lines among firms, in-house departments, and service providers. Law is entering a new collaborative phase that is reshaping and restructuring its providers.
Until recently, it would have been unheard of for a law firm to provide space to tech companies, much less to introduce them to clients and to work with them to develop automated solutions to ‘legal work.’ But consumer expectations, technology, a ‘sharing economy,’ and new delivery options has changed that. No legal provider has a monopoly on resources, talent, or the ability to deliver solutions that will drive impact for consumers. It takes collaboration—thoughtful collaboration—to move the needle and to extract ‘more with less.’ And that’s the lesson that Fuse and other carefully conceived strategies for improving delivery tells us.
Even Allen & Overy, with its stellar brand, resources, and reach does better when it collaborates with others in the marketplace. ‘Collaboration’—like ‘culture’—is a commitment to an ethos, a set of values. It cannot be switched on and off. What makes Fuse special is that it is part of a holistic approach by A&O to embrace a client-first strategy. Collaboration is the means and byproduct of that overriding objective.
A legal incubator, like technology, is only as relevant as the problem it seeks to address. Throwing together a group of tech companies, students, or entrepreneurs and providing them space in an ‘incubator’—without more-- will not solve law’s wicked problems or address consumer challenges. Fuse provides insight to the culture that spawns a thoughtfully-conceived incubator and a checklist for how to manage it.
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