In this week's Law Firm Disrupted, we meet more characters from UnitedLex whose observations on the industry and the company didn't make it into a recent profile.

I'm Roy Strom, the author of this weekly briefing on the changing legal market, and you can reach me here or sign up to receive this newsletter here.

Behind the Scenes with UnitedLex

This week, The American Lawyer published a profile I wrote for the January edition of the magazine about UnitedLex and its CEO, Dan Reed.

The story hit on many of the themes we've discussed before in this space. Prestige in the legal services market. The disaggregation of legal work. And whether alternative legal service providers like UnitedLex will ever go mainstream. So if that's of interest, you should read it.

Through the course of my reporting, I spoke with more people than I could introduce into the piece. And the people I did speak with said a lot that I couldn't squeeze into the article. That's a somewhat disappointing aspect of almost any long-form reporting project. You can't wrap all the useful information you collect into a single, compelling narrative.

So, here, I'm going to introduce you to a few more characters that I would have liked to include, and offer a few more observations from some who already appeared in the article.

Perhaps the most entertaining character at UnitedLex that I spoke with over my roughly three months of reporting on the company was Eric Gonzales. He is only briefly mentioned in the story as a guy who (may have) introduced the term “the art of the possible” to UnitedLex's specialized vernacular.

Gonzales is the senior vice president of legal solutions, which basically translates to a salesman of big-ticket outsourcing projects. He is a veteran of the business process outsourcing world, and a relative newcomer to the legal industry, having worked at Williams Lea since 2010 and UnitedLex since 2013.

Still, he knows enough about law firms to say things like this: “I found out that law firms are very difficult entities to deal with from a business perspective if you're not hiring them and paying their legal fees.”

And on the legal industry's level of business self-awareness: “Working with these corporate legal departments and getting under the covers, you find out, hey, there is a lot about your business that you don't know.”

“Even in litigation alone. It's such a high spend area, and the discovery components are significant. [But there is] a lack of governance based on who's managing the portfolio. And there is a lack of metrics to even identify the cost of ownership. Those are the things we talk about, but nobody seems to know those numbers,” Gonzales said. “Part of what we are doing in terms of building the art of the possible is helping organizations quantify where they really are. What is your base point? You don't know.”

The article also briefly featured a former UnitedLex executive who spoke about a previous employer on the condition of anonymity. The executive had mostly positive things to say about UnitedLex and Reed.

But the executive also brought to light some of the broader, unanswered questions the company faces. One of those questions is in regard to disaggregating legal work and the potential risks that come with that.

The biggest example of disaggregation in the story is DXC Technology's general counsel Bill Deckelman's plan to train young lawyers or law school graduates on how to negotiate basic parts of the company's contracts and then have them work, for a per-contract fee, on deals they select.

As the former executive pointed out, there are some inherent risks to sharing projects like contract review among a number of different lawyers or entities. At what point does something get lost in the communication?

“As you start to have multiple providers touching one particular project, at some point you need some level of connectivity between the team levels to make it flow seamlessly,” the executive said. “I don't know where you hit that tipping point. And I think that is the question. And how likely is it that a company like UnitedLex can come to the point with a full-service solution where they bring all the pieces to the table? Or can law firms come to the table and change their business model to do more? My gut is law firms are not going to become a UnitedLex. But can a UnitedLex bring a more connected solution? Certainly when you give them a chance like DXC did.”

I also spoke with Gabriel Buigas, a UnitedLex executive who worked inside HP's legal department for more than 10 years. Buigas talked about how the company views its place in the legal market alongside top law firms. He says UnitedLex is looking to help law firms figure out what work they should keep doing, and what work they should partner with providers like UnitedLex to handle.

“We have a great deal of respect for top firms, because we know they are in a good position to win,” Buigas said. “Their issue is their lack of capital and process rigor. They still have the best relationships. They still are the trusted advisors of the GCs. It's up to them to transform.”

If there is one clear vision UnitedLex has about the legal services market, it is that work will continue to be chopped up into pieces by corporate clients who are more willing to send less important matters to third party providers.

If that's true—and I think it will take a long time before that answer is known at a meaningful scale—then law firms likely do have a decision to make. Should they cede that ground, or should they rework their processes to compete at a lower price point?

Roy's Reading Corner

On Making Competitive Decisions: The concept of law firm self-analysis was the main point of this year's annual Georgetown/Thomson Reuters report on the state of the legal market. The report said, despite a generally healthy year for law firm financials, that mid-tier firms are making mistakes by following the same strategy as the world's richest firms.

From James Jones, a senior fellow at the Center for the Study of the Legal Profession at Georgetown University Law Center: “We do not have one market for legal services anymore. A lot of people have a really hard time being honest about where their services fall because the vast majority of American law firm services are in that big middle. And I've never met a lawyer who didn't like to think that he or she performed brain surgery. But you know, there just aren't that many big brain operations going on that clients are paying for.”

On Analytics: Ogletree Deakins announced an interesting partnership with legal analytics firm LegalMation, which can, at the moment, draft responses to labor and employment complaints within two minutes. The deal Ogletree Deakins announced is interesting on another level, though.

It is an attempt by the firm to analyze at a granular level the complaints that its clients have faced. LegalMation's software can pick out 500 data points in a given complaint and can provide a report on those data points' relationship. For instance, it can tell you all of the claims (by verb) against the defendant. It pulls into an Excel file every time a defendant is said to have “breached” or “failed” something. It's like doing sentence analyses back in 6th grade – but in legalese. Having that information for every complaint ever filed against your business? It would probably lead to new behaviors that would limit lawsuits.

On Lockstep: My colleagues from across the pond at Legal Week, Hannah Roberts and Krishnan Nair, wrote this week on the departure of a high-profile private equity partner from Freshfields to Kirkland. It's a great piece of reporting that tells the story of how Freshfields modified its lockstep compensation system, according to their sources, in order to keep the exact two partners who have now left to go to Kirkland.

Most of the commentary around the dangers of modifying a lockstep compensation system is that it will create resentment among the majority of partners toward the outliers. But maybe that's too simplistic. After all, the firm decided to pay the stars more money. The majority of the partners probably understand the stars bring them a lot of value. But what about the outliers? What if they don't feel comfortable breaking up the culture of the firm? That's not a concern at a place that never had a lockstep system in the first place.

That's it for this week! Thanks again for reading, and please feel free to reach out to me at [email protected]. Sign up here to receive The Law Firm Disrupted as a weekly email.