For all the rampant spin around alternative legal suppliers, it is safe to say general counsel (GCs) have been less than satisfied with their services.
Trainline GC Neil Murrin has few qualms around the quality of the people the likes of Axiom, Lawyers On Demand (LOD) and Obelisk provide, but finds pricing a sticking point. He has used Axiom and LOD for various one-off projects over the last year: ‘They provide very good people. Everyone they’ve sent has been really high calibre. If you want to bring in someone yourself, you have to interview thousands of people, but they do that filtering for you.’
But he is less pleased with the rates these providers charge, often reaching around £800 a day. ‘Back in the day, you’d just pay the salary of whoever you were using but now it’s moved to this day rates model. Are there no volume benefits they can give us? The rates can be very expensive.’
Stuart Kelly, Network Rail’s GC, goes further. Despite many conversations with such providers over the years, he describes them as being not as commercially keen as he would expect: ‘They’re just a little bit cheaper than a secondee from one of my firms, which I know and can be assured of the quality. I’m deeply disappointed after all the years of talk. It needs to be cheaper to the point where it’s an absolute no-brainer.’
Kelly is not the only one who sees more value in secondees. RSA’s GC Charlotte Heiss argues there is more gain, as both the insurance giant and its external counsel benefit from the arrangement. Chris Newby, GC of AIG, has used LOD for maternity cover, but says he’s ‘surprised’ at the popularity of such providers because they’re ‘quite expensive’. He adds: ‘I watch their model with interest, to see whether it comes under pressure. For maternity leave cases, it’s been better for us to get someone from a law firm and contribute to their salary, because it’s cheaper than Axiom.’
KPMG legal chief Jeremy Barton mentions using Integreon for outsourcing and LOD for temp sourcing, but seems more excited by the prospect of using ‘consortia’ of external advisers instead. He says there is an increasing trend for a specific trio of a Magic Circle firm, a mid-tier firm and a new law provider to collaborate and offer services to clients as a team. He would be interested in using a consortium for a big regulatory investigation or real estate portfolio, but notes: ‘I don’t know whether to try it on a big deal and run the risk, or do it on a small matter and not really test it properly.’
Despite some grumbles, there are still believers in the alternative model. Catherine Johnson, GC of London Stock Exchange Group, runs her own ‘managed legal service’, where entire high-volume parts of the legal function are outsourced to providers such as LOD and Radiant. ‘It’s an efficient way to resource and with a small team like mine, it’s important to keep them engaged through a variety of skilled work. Outsourcing has also created a huge amount of data that we can use to work out how best to focus our time and resources.’
Likewise, Vodafone GC Rosemary Martin has integrated Axiom resources into her Belfast legal team, echoing Johnson’s admiration for the data it produces. Martin has also trialled Lexoo, a lawyer-sourcing service often likened to Uber, but experienced teething problems: ‘We just wanted to use them as a supplier and let them identify the sort of lawyer they needed. They have now shifted their model for us and we’re hoping to use their resources more.’
Indeed, some in-house teams have such a thirst for alternative providers they are setting up new dedicated adviser panels specifically for them. Pearson, led by legal head Bjarne Tellmann, is looking to establish a panel exclusively for alternative providers in 2019. The Royal Bank of Scotland (RBS) and its GC, Michael Shaw, have unveiled similar plans. On a recent Vodafone panel, Lexoo was selected alongside a host of mainstream providers.
But if there are problems, do they lie with the providers, or are GCs just not getting the best out of them? Martin concludes: ‘The quality of these providers varies with the lawyer. You have to remember there’s a difference between managed legal services like Axiom and the Lexoo model. If you invest in managed legal services and they really understand how you work, it can be a really valuable and successful relationship.’
According to our survey, the non-law firm providers of legal services that have had the most impact on clients’ minds are the accountants: both EY and PwC appear in our top five list. However, there are some indications that this is a brand halo effect of the Big Four rather than actual use by senior GCs. And the most established players in this market, Axiom and LOD, still appear to be widely used. The new addition is online paralegal resourcing service, F-Lex, which had a breakthrough in 2018 winning Legal Innovator of the Year at the Legal Business Awards.