Reprinted from Westlaw Today with permission of Thomson Reuters
The arrival of new CEO Varun Mehta in January 2020 marked the start of a busy year for legal managed services provider Factor.
The Axiom spin-out company rebranded, brought on additional new leadership, announced a partnership with a major law firm and secured fresh investment. Mehta, said Factor - formerly Axiom Managed Solutions before the rebranding - hired over 200 people last year globally. Among the hires was legal technology veteran Ed Sohn, who joined from EY Law to be head of solutions.
The growth didn't stop in 2021. Last month Factor expanded its board of directors with Andrew Ballheimer, the former global managing partner of U.K. law firm Allen & Overy - furthering its goal of bridging gaps between traditional law and "new law." Factor and Allen & Overy also separately partnered last year to help financial services companies manage contract matters related to the transition from the London Interbank Offered Rate (LIBOR).
Mehta spoke with Reuters about Factor's ambitions, what the company means when it advertises "complex work at scale," and the future of the legal ecosystem. This conversation has been edited for clarity and length.
MEHTA: Any work that you would consider 80% execution, 20% advisory, that's great work for Factor. Anything that you'd consider the alternative - 80% advisory, 20% execution - that's great work that you want to either hire someone in-house with core competencies, and that's how you get the best value for money, or you bring on outside counsel that have targeted expertise in the areas that you're looking for.
MEHTA: The market's like, okay, you're either a law firm, or you're not a law firm. So if you're [an] alternative to a law firm, and we're gonna bucket all you guys together, right? As the market continues to mature, there is going to be further definition of different workstreams and types of non-law firm legal providers. I would bucket [the ALSP market] into three, maybe four buckets. The first is [things like] e-discovery, document review is a great example, where it's work as part of a legal process.
And that's where a lot of good industrialization [is] happening. Then there's also another bucket, which is work to... better administer and manage the legal process. Then I'd say that there's probably specialized legal technology or tech-enabled services that are doing targeted things in IP or other areas.
And then this category that we've really kind of focused on, which we do feel like is largely untapped, what we call complex legal work at scale. And what we're bringing to the market, who we usually see in the market when we're competing for some of these work streams, are usually the Big Four ... or the alternative side to law firms.
The difference between what we do and even what a law firm does, or even what an in-house counsel does, is moving this thought process from matters to portfolios of work.
I think 98% of [legal] spend still goes to traditional law firms in traditional hourly rate billing arrangements that have gone up, but haven't caught up every year for the last 20 years, as profits per partner have gone up every year for the last 20 years. And so, it's very easy to say, hey, the law firm is the boogeyman or the bad guy. But they are running a business that customers want to buy, or are buying from, either way. We believe that there is a natural evolution of what we call legal companies or law companies evolving and integrating service offering, service delivery with law firms.
MEHTA: One of the big points coming into this new role and what I'm and really enjoying, a lot of it's about building community and understanding that pointing fingers won't solve the problem. Ridiculing one part of the ecosystem won't solve the problem. We need to partner with law firms. Those that want to partner - and there are many - need to create compelling solutions to important problems that GCs and their companies they serve have. And then that's how we bring technology to bear too. Most GCs don't actually want to go out and figure out how to evaluate and buy all this tech that's being generated and created. I'm very excited about that, by the way, but they don't want to buy it, implement it, that's not their core competency. That's not what they get hired to do, by the CEO or the board. But they want people to help them do that. And that's where ... companies like us come in too, right? Where we want to help actualize the use of technology.
What we've kind of really anchored on is how at Factor we can create a similarly seamless experience by thinking about the ecosystem of law firms, thinking about the ecosystem of technology providers, and bringing that together.
MEHTA: We anticipate partnerships, both with technology providers and law firms, to be a huge part of our focus. What we partnered with A&O on was specifically the changes to the market related to the transition from LIBOR. And what's exciting about that is we're kind of looking at the variety of problems our customers are going through.
I anticipate more partnerships with A&O because it's become a strong alliance, but I also do anticipate, over the coming years, a handful of partnerships with different law firms, but they'll be targeted once again to specific areas of the market, specific products and solutions.