The LexFusion Consortium – Analysis + AL TV Interview

LexFusion is a new ‘go to market collective’ that will ‘curate’ a group of legal tech companies and help sell them to law firms and corporates. But will it work and what are its pros and cons? Artificial Lawyer talked to co-founder, Joe Borstein, former Managing Director of EY’s Pangea3 business, about the consortium project.

In a nutshell the idea of LexFusion is to offer customers, both corporates and law firms, the ability to buy from a group of carefully selected legal tech capabilities that fit together into a compelling offering. These are pitched to the clients at regular intervals, but not incessantly, reducing sales pressure on potential buyers and creating a more meaningful sales conversation. These meetings will be led by Borstein and cofounder, Paul Stroka, also from Pangea3/EY.

Or as Borstein explained it’s ‘a multi-party partnership’. It’s also reminiscent of what the proto-global law firms did in the late 1990s when they wanted to provide clients with a compelling multi-jurisdictional offering, but didn’t want to merge, and so they built alliances. Those alliances eventually became integrated and created some of the global law firms we see today – and that’s a question this site put to Borstein, i.e. is this a precursor to a massive integration project?

He explained that this is not the goal, even if as time goes by they will look at how the seven, for now, companies can build APIs between each other and work more closely. However, the companies will remain 100% independent.

That then raises the challenge of what happens if some of the more expansive companies, such as Litera, which has made no secret of its major growth plans, builds or buys a capability that then occupies the same space as one of the consortium members.

Borstein’s response (see AL TV interview below – 19 mins approx.) is that he and the other co-founders have spent six months picking these companies and feel confident that will not be the case.

AL TV Productions. Oct 2020.

Now the essential question: how will they make money? There will be a membership fee and also a commission on sales element.

And future growth? Borstein explained that new members will come aboard, but they have only just launched. The group will be forming links with incubators also, such as the UK’s MDR LAB, with the aim of identifying new legal tech companies that would be useful additions to the consortium.

This shows that LexFusion is clearly not going to stop at seven members (see list below). It will grow and grow, becoming an independently-minded platform of legal tech to perhaps rival some of the biggest players in the market.

One gap in the group is a major NLP doc review player. However, Borstein told this site they have not yet held formal talks with companies such as Kira Systems. And, of course, there are several such companies in the market now. It will be interesting to see which one joins the group.

Borstein also stressed that this was not just a US-focused project. He noted that Factor has a large office in the UK and other members have a strong presence in the Asia-Pacific.

All well and good, and in fact the first thought this site had in response was: ‘This is such a good idea – and an idea developed in other markets already – why hasn’t someone done this already?’

But, what of the members? Why did they join? Artificial Lawyer spoke to Eric Laughlin, the new CEO of Agiloft.

‘I worked with both Joe and Paul for years at Pangea3. The chance to work with them was one I jumped at. They are some of the most networked people in legal tech and so it was an easy choice for me,’ he explained.

‘It is a great help for a client not to have to imagine just one solution,’ he added. For example, Agiloft which has a focus on CLM, could work with Factor, which has legal process capabilities, to provide a more joined up solution. That in turn could be marketed by LexFusion in consultative meetings with a range of clients.

Artificial Lawyer also asked the same question put to Borstein: how do you stop stepping on each other’s toes as the companies expand and grow?

We will do all we can to support each other up to the point where it doesn’t make sense any more. That is what you do with a partnership,’ he added.

And could they all merge together, which as Borstein has said, is not the aim? Laughlin is very open-minded on this and client led.

Merge together? It’s the customers who will tell us if that makes sense. If all the clients say they want all of us to do that then we would consider that,’ he noted.

That said, this is not the plan…..even so, many law firms have built alliances saying they had 0% interest in merger, and then five years later they merged because the business case was so strong and the clients were so supportive of them doing that.

And, Ryan Alshak, co-founder and CEO of Time by Ping added: ‘We’re teaming up with LexFusion because they understand perhaps more than anyone how distinct, best-of-breed solutions can be brought together into something more than the sum of their parts.

‘While we’ve arguably come a long way, there is still much room for improvement across the legal industry, in everything from efficiency to lawyer well-being to access-to-justice, and we think we can amplify each other’s efforts in a way that will further catalyse that much-needed change.’

Overall then, is this ‘a good idea’? Artificial Lawyer has to say: yes. If your competitors are large platforms, or in the process of building such platforms, then forming a consortium to compete makes a lot of sense.

Are there potential challenges? For sure, and as explored above there are risks of stepping on toes as the members grow and evolve. But, if the members play nice and work together for a shared goal, this could become a truly significant player in the market.

The final question is: when will the next consortium form? When law firms started to build alliances, one group’s formation tended to trigger the creation of other alliances. Could we see more consortiums form? For sure, it would make perfect sense to do that, and given the large number of legal tech companies spread around the planet there would be easily enough different types of vendor to create multiple groups like this.

Of course, they would not all have the magic ingredients, namely Borstein and colleagues – who incidentally are hiring around the world at the moment. While the central idea of this approach is a sound one, much depends on the people holding those meetings with clients. After all, the consortium will succeed or fail on the outcome of LexFusion’s client interactions.

Good luck to them.

The seven members of the consortium at present. Note: it will grow over the next 12 months, with more companies to be announced in early 2021.

  • Factor – legal process,
  • Time by Ping – timekeeping,
  • HaystackID – ediscovery,
  • Litera – legal workflow specialists and more,
  • Priori Legal – lawyers on demand,
  • Intelliteach, outsourced IT services,
  • Agiloft – CLM and more.

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