The law firm as middleman

This past week brought word that Axiom Legal is working on opening its fourth office, this one in Chicago. The company is now at 230 lawyers and growing, not bad for an operation that hasn’t yet celebrated its tenth anniversary. Axiom is a firm that provides highly credentialed lawyers on a contract or project basis to in-house law departments for substantially less than what major law firms — many of which have incubated current Axiom lawyers — would charge.

Axiom has been a hit with clients, but an even bigger hit with individual lawyers, who have responded to the promise of interesting work on location with major clients at good (but not stratospheric) salaries and reasonably flexible hours.  Bruce MacEwen featured Axiom in a couple of recent posts, and the firm’s website offers plenty of articles in the business and legal press detailing its rise.

Axiom’s foray into Chicago is occurring around the same time that The Practical Law Company is establishing its first North American beachhead in New York.  PLC needs no introduction for readers in the British Isles, who will already be familiar with the legal know-how company that provides knowledge, transactional analysis and market intelligence for business lawyers and clients. Doug Cornelius at KM Space published an account of PLC in a post earlier this month, identifying the company as embodying the future of knowledge management.

I had the good fortune earlier this summer to speak with Ian Nelson, PLC’s vice-president of business development and marketing, who provided me with an online tour of the company’s offerings. PLC’s value proposition is that its own crack staff of lawyers collects and stays on top of critical information in business law, so that its customers don’t have to continuously duplicate that effort. It’s not far off the idea of private KM teams that I suggested in a post earlier this year.

These companies are among the most innovative entrants in a legal marketplace undergoing a great deal of upheaval, and they’re both worth your attention and consideration on their merits. But while they provide two different types of service, it seems to me they have one particular thing in common: they pose a disintermediation threat to law firms.

Neither would put it that way, I’m sure — PLC in particular counts both law firm and law departments among its clients. But both Axiom and PLC make available to corporate clients two things they really want — excellent lawyers and top-notch knowledge/analysis — for much less than what many law firms charge for essentially the same services.

Axiom provides AmLaw100-level lawyers without the overhead, on-the-job training, bonuses and partner draws factored into law firm associate rates. PLC provides a trustworthy, constantly updated source of knowledge for less than firms charge for associates to go research the same kinds of issues and produce the same kind of memos the firm has billed out hundreds of times before. Both companies offer the really valuable stuff clients like about lawyers without the extra built-in costs that law firms normally charge in order to access that valuable stuff.

There’s a degree of risk to clients, of course — the safety and security of buying legal services the traditional way from traditional providers gives some clients the kind of reputational and procedural safety nets they like to have beneath them. But as Axiom and PLC continue to prove themselves just as safe and secure as the name firms — and maybe more so? — the less that reputational advantage matters, and the more law firms look like expensive middlemen or gatekeepers creating costly obstacles to valuable legal services. In this economy especially, you do not want to be perceived as an extra layer of cost.

Axiom, PLC, and other innovative legal service providers promise valuable legal work without the traditional law firm encumbrance. If clients catch on to that en masse, look out.