International law firm Pinsent Masons is expanding its NewLaw secondment business Vario into Australia later this year, as The Journal of The Law Society of Scotland reported last month.

As the article detailed, Vario has a pool of 300 professionals and revenue growth was more than 40% in the 2015-16 financial year.  Australia will be Vario’s first base outside the UK.

Matthew Kay, Director of Vario told The Law Society that they “are keen to hear from senior practitioners with experience of recruitment to help us establish and grow our business.”  Pinsent Masons opened in Australia two years ago.

Vario’s entry into the Australian legal market highlights a trend among traditional law firms to branch out into the NewLaw style secondment business – both internationally and in the Asia-Pacific legal markets.  Vario will join Eversheds Agile in the Asia-Pacific region as another traditional firm secondment arm.  Other NewLaw secondment firms operating in the Asia-Pacific region include Axiom Law, LOD-Lawyers On Demand, KorumLegal and lexvoco.  Asia-Pacific jurisdictions now playing host to the NewLaw secondment business model are New Zealand, Australia, Singapore, and Hong Kong.  And lexvoco has just recently announced they’ll be expanding into Japan, the first secondment NewLaw firm to operate in Japan.

The growth and diversification of the NewLaw secondment style business into the prime centers of Asia-Pacific finance but not yet into other prime markets including mainland China, Indonesia, India, South Korea, Malaysia, Thailand, Vietnam and others – raises the question of whether the NewLaw secondment market in Asia-Pacific may already be saturated.  And whether saturated or not, what are NewLaw providers doing to distinguish themselves in what is clearly becoming a heavily contested market?

In preparing this post I interviewed, via email,  NewLaw leaders in the Asia-Pacific about whether they believed the market was saturated and what their firms are doing to distinguish themselves in order to more effectively compete.  Here’s what they had to say:

George Beaton of Australia’s Beaton Research + Consulting, a management advisor to the legal services sector on growth, strategy, client value and profitability — and Publisher of NewLaw New Rules – A conversation about the future of the legal services industry, told me that he believes “NewLaw in Asia will flourish much more in the SME markets than amongst corporates.  The corporate markets are saturated and from what I see, the Asia-based GCs of multinationals are not really interested…SMEs have huge unmet legal needs, so I think it makes sense that NewLaw will target them  Also, in time, Access to Justice (A2J) will be facilitated by NewLaw apps and business models”, he concluded.

Matthew Kay, Director of Vario from Pinsent Masons, addressing whether the Asia-Pacific NewLaw market is now saturated, explained to me via email that:  ‘Although it is difficult to know when a market is truly saturated, our experience to date is that this is far from the case in the Asian markets.  Prior to launching, we commissioned a piece of research on freelance lawyers within the Australian marketplace. The results showed that the percentage of lawyers working as freelancers in Australia was far lower than is the case for the UK.

Although the Asian markets are clearly very different from the UK, there is nothing leading us to believe that freelance law won’t continue to grow. Many of the factors that have enabled freelance law to prosper in the UK are relevant to the Asian markets; factors such as technology enabling people to work remotely, a rise in the demand for more flexible working arrangements and clients seeking greater innovation from their law firms are all enabling this change.

It is more likely that a cultural shift is still occurring, just as it still is in the UK and that as perceptions change to freelance law, then so will the number of people choosing to operate in this way and the number of clients using it.”

Kay also explained via email Vario’s Asia-Pacific differentiators:  “This is a very important point for us, we work hard in the UK to differentiate ourselves in a crowded market and those learning’s will be beneficial to us in Australia.

We intend to do so in a number of ways, such as:  We will work hard to attract high quality lawyers with a breadth of experience. Our selection process is very rigorous, from a typical campaign, only ten per cent of applicants will end up joining Vario.

Our unique matching process: We have used a professional assessment business to design a behavioural assessment which each Vario goes through. This ensures that we understand the personalities of each individual and can therefore assign them to clients where we know they will fit. We have recently reviewed our assessment tools to ensure that they are tailored to the Asian marketplace.

Our pride at being a core part of the Pinsent Masons firm:  We recognise that we aren’t just a freelance law provider, we are an extension of Pinsent Masons’ service offering and that means that everything we do represents the firm and its reputation. We work hard to ensure our clients receive the same quality of service and commitment via our Varios, that they would do when instructing the firm on a traditional matter.”

Anthony Wright, CEO of Lexvoco explained how his firm is differentiating itself in a market full of firms describing themselves as “NewLaw”: “ “New” law firms have started every week for a hundred years, and each of them have said they are different or better for many reasons.  Start-up legal services businesses are just focusing on more than good lawyers now.  Our focus is no different than any other business in any sector – trying to find the best people who fit with our values and share our passion for what we’re trying to achieve.  Perhaps somewhat different than other organisations is that we’re working very hard to upskill our in-house lawyers in creating legal technologies themselves and also formal and practical training in Lean Six Sigma, Agile and Design Thinking.  Lawyers who relish technology and techies that know legal process will be invaluable.”

Mardi Wilson, Head of Eversheds Agile in Hong Kong explained that: “the NewLaw secondment market is still in early stages and not anywhere near being saturated in the Asia market. For me, there are two main reasons why I think this. Firstly, there are clients in areas such as financial services that have embraced NewLaw secondments, but this is still pockets within the industry where there is high demand for skills like derivatives, company secretariat and funds. However, other skill areas such as litigation and commercial contracts, as well as other sectors like commerce and industry are still trailing behind. My view is that this provides opportunities for further growth in the legal market.

Secondly, the legal market still has fundamental ‘traditional’ principles that may see further shift and change in the future. By this, it is still very common for in-house clients to request ‘free’ secondments from private practice. It’s always a great experience for the lawyers who go on secondment and it does develop a much stronger relationship with the client. However, private practice must balance this with a commercial business case. I hear increasingly that private practice do not see the return of fee paying work resulting from these secondments, free secondments eat into the profitability of a team when already there is less work to go around in a more competitive market and lastly, when private practice suggests a compromise where the client pays for the seconded lawyer, this can come with a very hefty price tag considering some of the salaries with US or Magic Circle firms – and cost conscious clients have to then look for alternative options. Those alternatives need to be cost effective as well as able to solve the immediate pressure on team headcount. This is where NewLaw secondments have an opportunity to grow.”

On how Eversheds Agile is uniquely distinguish itself in Asia, Wilson explained that: “Eversheds Agile is the only NewLaw secondment offering that is a fully integrated part of a full service law firm. Our clients appreciate the fact that an Eversheds Agile lawyer is interviewed by Partners in the region and then supported by them when they are on placement with the client. It is the ideal combination of both the relationship with external counsel for high end legal work as well as quality assured secondees for short term resourcing needs – it provides our clients with different options to meet their legal needs – and budget.”  

Titus Rahiri, Founder of KorumLegal, explained that: “We do not see the Asia alternative legal services market as saturated. In our view, NewLaw in Asia  is on a growth trajectory and will catch up with the booming NewLaw sectors in Australia, the UK and the USA. Different propositions are setting up not only in Hong Kong and Singapore but also in Southeast Asian countries, China and elsewhere in Asia. In addition, as the client demand for innovative solutions continues to grow, we see further scope for more opportunities in Asia.

The challenge for us, and possibly other NewLaw players in Asia, is changing some buyers’ mindsets – and establishing a reputation for quality, client-centric solutions. On the legal consultants’ side, we receive many inquiries from lawyers wishing to join our legal consultants’ community. They are looking to do something different, and are attracted by our flexibility and emphasis on community so we are always welcoming exceptional legal talent with an entrepreneurial mindset, or those who want to be a part of the growing Gig Economy.”

On how KorumLegal is differentiating itself – Rahiri explained: “Alternative Legal Services is a broad term that covers many types of business models providing a wide range of legal services.  However, they do have one factor in common: they have been set-up to provide clients with an alternative to traditional “BigLaw” firms.

KorumLegal is differentiating itself by being clear about who we are and what we offer clients.   

  • We are a boutique legal consultancy offering integrated and customised legal solutions – for example, we currently have a number of legal consultants on in-house assignments and also providing virtual legal support; we are undertaking legal project and operations management training, and we are currently developing our own LegalTech capability – as a product and as a service. These different offerings can be integrated into a combined solution or provided independently.
  • We are agile and can flex to meet our clients requirements. We believe that given our technology driven lean operations and independent structure, we can be more nimble than our competitors, which results in being more client-centric and innovative too.
  • Our flexibility and agility is reflected by our active clients, including assisting start-ups, to supporting multinationals and global financial institutions. Our independence also enables us to collaborate with law firms rather than compete with them.
  • Our consultants’ team is made up of senior legal consultants, with different areas of expertise, based in Hong Kong, Singapore and globally. We implement a rigorous consultant onboarding process, and as a service-oriented boutique operation we closely manage each client assignment. Our core team combines in-house, private practice, recruitment and technology backgrounds which enables KorumLegal’s unique holistic view of the legal sector and our ability to collaborate and create truly distinctive legal services in Asia.”

John Knox, Head of Asia for LOD – Lawyers On Demand, explained his views on whether the  NewLaw market in Asia-Pacific is now saturated: “Far from it in my view, especially if you compare the NewLaw market in the Asia-Pacific to the U.S. and UK markets, where it is more developed and there are far more competitors. I don’t know the exact numbers but my guess is that there are probably 20-30 NewLaw players in the U.S., 15-20 in the UK and only 4 or 5 in the Asia-Pacific. The Asia-Pacific is also the fastest growing legal market in the world and new entrants is not necessarily a bad thing. The more players that enter the market the more credible NewLaw becomes and the faster the market will develop. There are also several markets in Asia where there are no players at all (i.e. China, Japan, Korea, India etc.). My view is that the market for NewLaw in Asia is only just getting started and the opportunities are huge.”

Knox also detailed LOD-Lawyers On Demand’s key differentiators:  

  • “We have the strongest brand and we continue to invest significantly in this
  •  We have the widest reach and most offices in Australasia (6) and our clients value the regional coverage
  • Based on client feedback, we have the highest quality lawyers and consultants (we pay top of market to get the best people). We are not the cheapest, but the most reliable and highest quality.
  • We place the biggest emphasis on client service. In the Asia-Pacific we now have 11 dedicated client solutions and account managers in Sydney, Melbourne, Perth, Brisbane, Singapore and Hong Kong that do nothing else but service our clients. Our General Counsel feel and value this level of service. When they have a need we can generally service that need within 24-48 hours if needed.
  • An international footprint to service these Asia-Pacific clients.”

Kirsty Dougan, Managing Director, Axiom Asia explained that:  “As the pioneer of Axiom in Asia, the world’s largest New Model firm, beginning in 2009, I have welcomed the new entrants to the market over the past few years.  Axiom has been instrumental in doing the following in Asia during this time:

  • We’ve helped shape demand, cementing the NewLaw category, and put incumbents (i.e. traditional law firms) under pressure to innovate and reduce their fees. The client has ultimately benefited from this trend in recent years.
  • I don’t see every new model firm surviving, however. There is a limited talent pool in Asia and you have to be able to offer something unique and compelling to attract and retain that talent.  This is what I firmly believe sets Axiom apart.
  • It’s important to remember that law is a traditional, protectionist profession.  This is why Axiom carries global malpractice insurance, maintains rigorous hiring processes ( we only hire 1 of every 20 applicants). This provides clients with the assurance that Axiom is the market leader.    

Given the flurry of activity in New Model law in the past few years in Asia, clients now have increased choice. Cost is a big issue for our clients of course and sometimes they will go for the cheapest option but time and time again they tell us it’s the quality of our people and our client service that makes us the market leaders in Asia.

There is however absolutely no room for complacency and we are constantly striving to improve our value proposition whether that be through, among other services, our proprietary technology offering which we are currently utilizing to help several major investment banks across the globe comply with new UMR requirements. Lawyers are also are much more discerning given the increased choice in this space in Asia but ultimately tell us they want to join an organisation that offers them a true career path. We are, for example, awarding equity in the firm to our stellar performers and that is just one example of how we look after our employees, retain and motivate them.

Axiom, being a true global player, is also uniquely placed to offer world class training and development for our lawyers with our own internal Axiom University. We also launched a partnership with McKinsey offering Business of Law courses and it is no surprise that the Asia team has had the highest uptake of places on this course with a 100% pass rate. Almost 75 per cent of our lawyers have completed this course. Our insourcing capabilities together with our world class delivery centres across the globe  mean we are also uniquely placed to offer our clients a solution that can span many jurisdictions. With the appointment of our new CEO Elena Donio, former President of Concur, Axiom is poised to enter a new chapter with a particular focus on our technology offering and Asia will be a key part of that. We are also expanding into new jurisdictions with new offices in the offing. Watch this space!”

Looking to the future

As some of Asia’s NewLaw leaders have demonstrated here – there is some disagreement about whether the market is saturated — and a clear drive to create an abundance of specific differentiating elements from firm to firm.

The next questions to arise are likely to be:  How many more traditional law firms in the region will adopt the NewLaw secondment business model?  And how many free-standing NewLaw firms will enter the market?  Beyond that – questions remain about whether NewLaw will begin to serve more domestic incumbent Asia-Pacific corporate General Counsel – or be constrained by what George Beaton sees as an unwillingness by APAC headquartered companies to consider NewLaw options.  Further, and perhaps similar to George Beaton’s observation and fundamental to the continued expansion of NewLaw in the Asia-Pacific region is — will any current NewLaw firms seek in a concerted fashion to enter Asia-Pacific region “frontier” markets?  

NewLaw’s corporate business structure in general terms does not appear to be a hurdle from a regulatory perspective — however there may be market resistance as, for example: many Mainland China practitioners effectively work as sole practitioners, there is a strong propensity for Japanese companies to work closely with traditional outside counsel – and so far there has been significant resistance in South Korea to the expansion of traditional foreign law firms in the market – let alone NewLaw.  The Malaysian Bar in particular may be instructive as to how some jurisdictions outside the traditional financial centers approach NewLaw secondment style businesses.  In a recent move the Malaysia Bar appears to have perhaps restricted the operations of some legal document startup companies in their operations in the country.  The difference here, however, is NewLaw secondment firms are offering lawyer services and the legal document startup companies are seen to perhaps be offering legal services without the participation of lawyers.  The Malaysian Bar has expressed support for the NewLaw concept, however.

What is clear – in a relatively short period of time — is the NewLaw secondment firms have mushroomed, diversified and appear to be expanding regionally somewhat.  It appears likely more competitors, attracted by the opportunity the market presents, will enter in due course and also seek their own differentiators to help accelerate growth and competitiveness.   But equally important, NewLaw’s pioneering firms in Asia do appear very well-positioned to continue to dynamically diversify to meet the market — wherever that might be.

Posted by John Grimley

John Grimley edits and publishes Asia Law Portal

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