Factor, the ALSP with a focus on high volume, but relatively complex legal matters, has hired a new CFO, John Dillon, former divisional CFO of global consulting firm Mercer, while Roxann Erxleben will take over as COO, who was formerly at Accenture and Axiom – which Factor was once part of.
These are important and high level hires that show the serious intent the company has to drive growth at the already approximately 500-person business, and which recently won a mandate to work with Allen & Overy on a multi-party offering to help with the massive IBOR/LIBOR demands that banks are now experiencing.
Varun Mehta, who joined as CEO in January, (pictured above), hailed the hires as an important step for the company – which they are – but also spoke to Artificial Lawyer about the bigger picture of how the market is changing and where Factor fits in.
‘I started in January 2020 and so have been five months on the job. It’s been an interesting time!’ Mehta noted wryly.
He said that the initial goal has been to build out the foundations of the business, to reinvest in it since its spin-out from Axiom, and to then go to market and show what they are capable of.
All well and good, but is the market ready for an ALSP, ….or shall we just say a Legal Services Business (LSB), such as Factor, which provides support for complex matters in volume and sets itself apart from other more basic process shops in the market, but is not ‘a law firm’ either?
The short answer is: yes.
‘Recently I did a workshop on the future of the legal department and the level of engagement [from inhouse lawyers] was great. They acknowledge things need to change. There is a transformation,’ Mehta told this site.
He added that clearly Covid-19 and remote working have had an impact on making people look more at how they handle legal matters, but more widely there is a greater debate now around process, tech and workflows that is taking place regardless of the immediate crisis.
‘People are asking: what is the right legal ecosystem? What is the advisory, internal legal work, the tech, the execution of that work, that we need?’ he explained.
His key point, as illustrated with the A&O work, is that you need a marriage of different capabilities. In that particular case the City firm is working with Factor, as well as Eigen Technologies and iManage RAVN, to provide a range of tech, process and high level advisory input into the LIBOR/IBOR repapering project. It’s a combined effort and has an array of skill-sets.
He also stressed that there is a huge amount of work that goes into putting all of this together into one smoothly working solution.
Risk Mitigation and Complexity At Scale
Then we get into the broader picture, such as why do so many clients still think about solving their legal problems in terms of going to one ‘Big Law’ firm and expecting that business in isolation to solve everything from both a legal and execution standpoint?
Why don’t more clients embrace a more segmented approach – getting various LSBs and tech companies to work together? Or, asking the Big Law firm to produce this joined-up, multi-party offering? (And of course, some law firms have built a variety of process resource responses that are part of the wider business – though many still haven’t done this.)
‘The hard part for the legal industry is quantifying risk mitigation. Risk is used as a blanket reason to spend the most money,’ Mehta explained.
‘The issue is better risk stratification,’ he added.
I.e. you need to examine the risk you are trying to ameliorate, then assign the right LSB/tech input for each of these levels of risk. In some cases, as above, this can mean multiple parties all working together as one.
Mehta continued that automating lots of low-end work has its place, but there remains a place for work that Factor does, which is not high end advisory work, but not the most basic LPO work either.
This strategy can be summed up, as Mehta puts it: ‘We want to own the idea of complex work at scale.’
So, we’ll see a market of different LSBs that match-up with different strata of risk, sometimes working alone for a client, sometimes in joined-up teams with other LSBs and tech providers. But all because the clients have re-examined their legal risks and rethought how best to assign that work to the right solutions.
And that’s a good place to leave it. Expect to hear more about Factor in the months ahead.