Asia’s legal market is changing and who better to know what strategies firms might deploy to adapt to these changes than Melbourne-based Eric Chin, who helped co-found Alpha Creates in January of 2019. A long-time strategic advisor to the legal services sector, Eric also coined the term NewLaw in 2013.
In this interview with Asia Law Portal, Eric explains why Alpha Creates was founded, its’ role in helping legal services sector organizations adapt, his thoughts about the current competitive landscape for legal services in the Asia-Pacific region, the background behind his coining the term NewLaw, and what law school students can do to forge a career in a changing legal services sector.
Alpha Creates came about as a reflection of the changing legal market. About a decade ago when I first entered the market as a consultant, most of my work with law firms was around growth strategies; whether it was practice specialisation, geographic expansion or mergers and acquisitions.
This shifted really quickly into globalisation as we helped firms grapple with their globalisation strategies. It was also during this time that NewLaw segment of the market started to move from the periphery into the mainstream consciousness of the legal market.
In the last 24 months, we have also seen that shift for the LegalTech market as it has now found a place in law firm boardrooms. All of these trends combined with an expanded competitor set in the market has put innovation at the top of the list for law firm leaders.
Alpha Creates brings together our founders’ years of experience of working with the stakeholders of the legal industry on innovation gigs, strategy engagements and technology projects. Our goal is to help shape the legal service providers of the future.
How does Alpha Creates help law firms and legal services organizations?
There are really three legs to the Alpha Creates stool. We work with law firms on their innovation projects, regardless of where they are on their innovation journey. The law firms responding to the innovation call, as innovation functions became du jour, in three ways:
- Foundation of innovation committee: Made up of a diverse group of lawyers and professionals at the firm. This is where most firms’ innovation journey start.
- Appointing an Innovation Partner: Majority of firms appoint a practicing lawyer, whether a partner or senior associate into this role. They also get some fee relief to work on this part time while keeping their practice.
- Appointing an Innovation Director/Head of Innovation: An innovation specialist or someone from the technology team is christened the Head of Innovation with dedicated resource to help the function role out their innovation program across the firm.
We can resource accordingly based on how the innovation function is established above.
We also work with legal service providers on strategy project, whether they are market analysis, competitive analysis, growth strategy and mergers & acquisitions. This is drawn from our years of working as external and internal consultants to the legal market.
Finally we also work with legal service providers on their technology journey. We caution firms not to chase headlines when looking at technology. The biggest mistake firms make is the look at the most recent technology fad like ‘artificial intelligence’, ‘blockchain’, etc.
The reality with technology projects is that you need to start that journey with defining the problem you’re trying to solve, then assess how people are currently working together to solve that problem, take a picture of the status quo process and then assess the technology solutions in the market.
You coined the term NewLaw – what do you see ahead for NewLaw firms in the Asia-Pacific region?
The origin of NewLaw that I introduced in 2013 was in response to an interview that Mark Harris had with Bloomberg Law when he was asked if Axiom was an LPO (legal process outsourcing) provider. Mark’s response was that “part of the challenge of innovating and creating a new category is that there is no vocabulary yet to identify that category”. And it was also in response to The Lawyer’s series of articles about predictions for 2018 where there was no mention of any of the alternative legal service providers.
Since its introduction, many industry experts and analysts have put forward their own definition for NewLaw. My definition for NewLaw, before it took a life of its own, was really to differentiate the business model. NewLaw firms are businesses that use labour arbitrage at the centre of their business model in the delivery of legal services.
And the main examples that fall into this definition are legal process outsourcing companies, lawyer secondment firms (or flexible lawyer services) and fixed fee legal service providers leveraging on-demand lawyers.
You can actually trace the history of the NewLaw market when you take a step back to look at the evolution of the legal industry. For the longest time, when an organisation had a legal need, it essentially had two choices. First, to turn to their legal departments then when expertise were required, they turn to law firms. And law firms have built a very successful business model around expertise arbitrage for corporate legal departments.
When you think about it the law firm business model is about recruiting, training and then charging based on expertise provided. It is not until the turn of the millennium when the industry was engulfed by outsourcing trends that the first NewLaw wave of legal process outsourcing entered the market. It is in the 2010s when the gig economy entered the mainstream consciousness of the legal industry that flexible lawyer services became the second NewLaw wave.
There are a lot of big opportunities for NewLaw firms in the Asia-Pacific region. Some of the NewLaw firms are already diversifying and evolving their businesses in tune with the changing market. They are offering legal operations consulting and LegalTech consulting to legal departments. Law firms have also created their own NewLaw services, whether they are LPO services or managed legal services.
Adoption of NewLaw services will continue to be highest in internationalised markets like Hong Kong, Singapore and Australia where borderless ideas tend to travel with business flows. Of course there is the rest of the Asia Pacific region where legal entrepreneurs are starting to establish their own NewLaw service and the market is being educated by what’s happening in more competitively mature jurisdictions.
How has the competitive landscape in the Asia-Pacific region changed for law firms and legal services sector companies in recent years?
For Asia-Pacific based law firms, we have seen a few competitive waves shaping the landscape. Globalisation has played a big part in reconfiguration the strategic groupings of firms in their local market. As international law firms localise their practice where they could, the competition heightens for mid-market local firms that were otherwise not competing in the same pool as their top tier local counterparts.
The rise of alternative service providers in the market has also shaped consumption behaviour of general counsels. The NewLaw market, made up of legal process outsourcing companies (LPO), managed legal service providers and fixed fees lawyer network firms are dominant in different jurisdictions across the Asia-Pacific region. You can find LPO providers in India and the Philippines due to their supply of talented lawyers and exchange rate arbitrage available to more mature markets.
Managed legal service (lawyer secondment) providers have entered the more internationalised legal markets in the region like Australia, New Zealand, Singapore, Hong Kong and to a lesser degree, Malaysia and Japan. They are focused on helping legal departments with building more efficient business units by using flexible resourcing and increasingly helping with legal operations efficiencies.
In recent times of course, LegalTech startups are thriving in jurisdictions like Australia and Singapore. Singapore is a great example of the government, through the Ministry of Law and the Law Society of Singapore have introduced rebate program to encourage the adoption of LegalTech by law firms. At the same time, legal departments are also looking with enthusiasm the potential of adopting new solutions entering the market.
Then of course, we have the Big Four accounting firms that are building their legal arm by trading up their legal talent gene pool through hires from top tier law firms. They are also building their legal operations consulting capabilities, working with LegalTech providers to build new solutions and launching their own NewLaw services.
This makes the competitive landscape in the Asia Pacific market diverse, similar to a Cambrian explosion, as the competitive landscape expanded from law firms to NewLaw, LegalTech and the Big Four.
What’s your advice for law students interested in an alternative legal career? And how will lawyers work change in the future – and how can law students prepare for those changes?
When I first started my career in the legal industry, it was still a time when the law firm career path was the go to path and a move in-house was seen as a step down or for lawyers who have not made the partnership track. All of that has changed now. Top-tier lawyers move in-house because the challenge of running a legal business unit is completely different to practicing in a law firm.
As the market saw the introduction of alternative legal service providers, the career pathways for law students has grown, you can now seek a career in:
- NewLaw firms
- LegalTech firms
- The Big Four accounting firms
- Legal management consulting firms
The career path for lawyers has grown.
Most of the incumbent lawyers are also looking at the more tech savvy law students entering the workforce for help to transition the practice of law into LegalTech enabled practices.
Law schools are also exploring and introducing curriculums that expose students to coding, while it is not the job of lawyers to code, having the base knowledge helps law graduates navigate an evolving legal market.