Stuart Margetson: 'Lower legal bills are win-win for clients and law firms alike'
Firstly, a confession. I am a solicitor; for many years a partner in a leading law firm. As was my father before me. Now my son has taken up the "family business" as well. So, the law and, more particularly, the business of law has been a constant throughout my life.
Now, however, I chair a Dublin-based startup which some believe is an existential threat to solicitors, but which I believe is the key to helping both the in-house legal teams in large companies and law firms themselves to respond to the legitimate concerns clients and companies have about the high level of legal costs.
Johnson Hana International is the company in question. It was established by barrister and entrepreneur Dan Fox, who was almost lost to a career in pop music a decade ago but who, fortunately, has instead focused on how to disaggregate the business of law in order to identify those areas where alternative legal solutions can be applied to the advantage of clients. And, as a corollary, to the advantage of the law firms themselves.
Let's begin with the challenge. Throughout my career a constant criticism of the profession has been the high cost of the services provided. That criticism is applied particularly to the provision of what might be described as non-core legal services, which are often provided via law firms.
These are services which are process-led and which are defined by the volume of work involved more than the complexity or sensitivity of that work. Services like the processing of materials in response to discovery requests ahead of court cases, reviewing contracts for regulatory compliance, or examining and responding to data access and FoI requests. Traditionally, law firms have done this work even though it is far removed from the complex, value-adding advisory work for which most clients select them. Because it's undertaken within the practice, it is charged at solicitors' (usually junior solicitors or paralegals) hourly rates - often averaging as much as €250 or €300 an hour.
The Johnson Hana solution removes this labour intensive work from the law firms and distributes it among a team of highly-qualified lawyers who have chosen to join Johnson Hana for economic and lifestyle reasons. They subscribe to the smart working culture that Johnson Hana promotes. Some integrate with corporate legal teams and others choose to work from home.
By outsourcing work to these teams and project managers - supported where necessary by specially-designed IT programmes - Johnson Hana can ensure the work is completed to the same high standard you expect from a top-tier law firm, but at a fraction of the cost.
A big part of the value proposition is that, as part of their work on any project, our legal teams and project managers can also conduct audits on in-house legal departments to transform the way these departments manage their obligations. This is a unique offering which allows in-house departments benefit from a solution that not only identifies gaps, but can fill them.
Where some see Johnson Hana as a threat to traditional law firms, we see our solution as distinct from traditional legal services. Indeed, we see our model more as an aid which traditional firms can use to ensure clients are getting value for money, and to lower the legal costs to which clients are so sensitive. I have long seen the solutions which Johnson Hana offer as complementary to, rather than in competition with, traditional law firms and their practice.
So far, the market suggests there is significant appetite for this offering. Johnson Hana has been employed directly by some of the largest companies and organisations in the State - including some high-profile American tech companies - and by State institutions.
But, interestingly, we have also been employed directly by leading law firms in the UK and Ireland to support work undertaken in respect of high-profile litigation and large-scale compliance-related reviews. In the case of the law firms, some of our engagements have directly arisen from requests from their ultimate clients to engage us in order to reduce costs and drive efficiencies. Clients are clearly becoming far more sophisticated and knowledgeable as to what they should be being charged, and what alternatives are available. Other law firms have employed us directly because they recognise the value which we can bring to their client offering and because we can help them match the labour intensive service offering of some of their larger competitors.
Where we have been engaged, our clients are finding that the relevant costs are coming out at up to 50pc lower than would have been the case had that process-led portion of the work been done directly by the law firms themselves.
For years people have bemoaned the high cost of legal services. Now it looks like a solution is at hand to lower those costs dramatically. If this is what disruption looks like, I think it will prove a hit - maybe not the type of type of "hit" that Dan hoped for in his music days but a valuable one for all.
Stuart Margetson is chairman of Johnson Hana International and former partner at Matheson