Alternative legal service providers (ALSPs), and, in particular, contract lawyer offerings, may have been around in Asia for about a decade, but they have started to really come into prominence in the past year as client demand spikes. And lawyers are beginning to embrace the alternative way as well.

It’s been about a decade since the first alternative legal service providers (ALSPs) launched in Asia, but the last year has seen them really become important players in the legal services market, particularly in Hong Kong. 

Pioneers like Axiom, which started growing in Asia eight years ago, recently moved to a bigger office to accommodate the 45 additional lawyers it’s planning on recruiting by the end of this year. And new contract lawyer services have also sprouted, like Cognatio Law, which was launched in February by a former employee of Lawyers On Demand.

All this is being driven by the fact that an increasing number of companies are looking for a more cost-effective option for legal services, especially given that the mantra for corporate legal departments in the past years has been “doing more with less.”

The cost savings of using a contract lawyer from an ALSP as opposed to a lawyer from a traditional law firm is anywhere between 40 and 70 percent, says Lesley Hobbs, co-founder and chief executive officer of Cognatio Law.

“If you have a gap in hiring for a few months or haven’t got the bandwidth within your team to cover the work, it is more cost-effective to get a NewLaw consultant than perhaps a private-practice lawyer,” says Hobbs, who has more than a decade of experience in legal recruitment.

As a bonus, these lawyers are able to provide legal services tailored to the needs of general counsel due to the fact that almost all lawyers at the top NewLaw firms have in-house experience.

“Companies don't place that much emphasis on the actual legal knowledge,” notes Hobbs. “What they need is someone who can manage projects, and has actually worked in the industry itself.”

TRACK RECORD

The rise of ALSPs was accelerated by the global financial crisis, which hit companies and cut their legal budgets. Though many have recovered from the crisis, they’re still under financial strain and need to get their money’s worth from their law firms.

“Clients don't want to pay for the law firms’ art collection or their office views,” says Hobbs. “A lot of the growth in our space is driven by what clients are prepared to pay for. If they're paying about $900 an hour for a nine-year associate from a Magic Circle law firm, the equivalent person within a NewLaw model costs probably a fraction of that.”

But while companies the world over have been aware of this alternative, ALSPs have taken a while to hit their stride in Asia, a region reluctant to embrace change, risk or brands that are perceived as less prestigious compared to well-known law firms.

“Asia has been slower to embrace that change than other regions in the world,” notes Kirsty Dougan, the head of Asia at Axiom, who has worked in the region for more than a decade. “The Asian client mindset was typically quite risk-averse and conservative, but in the last couple of years there's been a visible change in attitude.”

“There has been a pivot in thinking among a lot of our clients, and they really understand our value proposition now,” she explains. “In the early days, they couldn’t categorise us and struggled to really pinpoint what we do. Now our clients fully understand what we do and they have bought into the value proposition, so much so that they can see a compelling alternative to traditional law.”

One reason for this acceptance of ALSPs in Asia is that they finally have been around long enough to build a track record, which Asian companies, with their bias towards big brands, want to see. “It takes time to build a track record and a brand in Asia,” says Dougan, “and that track record is paying off now.”

ALTERNATIVE CAREERS

It’s not just companies and clients that are becoming more aware of ALSPs, but also lawyers  in both law firms and in-house roles who now realise that there is an additional career path in the legal industry – that of a contract lawyer.

“Potential hires are more comfortable with the NewLaw model,” says Cognatio’s Hobbs. “They know that our clients include some of the biggest names in the financial and commercial space, and as a result they will likely be working with established names when they join a NewLaw firm. So, they can expect the kind of work they were used to when they had permanent in-house positions, but now there's more flexibility.”

Lawyers have also realised that in-house roles offer less of the guarantee that they once used to. “Since the global financial crisis, legal teams have pared back. Any growth in the in-house risk management functions tend to be on the compliance or audit side, not on the legal side,” says Hobbs.

With less legal jobs available and even less job security than before, legal professionals have been going to NewLaw to achieve greater control over their own careers.

“Traditionally if you were at a law firm, you stayed the course and either made partner or didn’t. People now want something different,” says Dougan. “They want more self-determination and more control over their careers. They also don't necessarily want to tie themselves to one employer for five to 10 years.”

As the new normal of not staying with the same employer catches on in the legal industry, so does the gig economy model.

“You think about how much the world has changed in the past decade or so – why does the legal profession remain inefficient and changeless?” says Dougan. “Someone asked me just the other day about the Uberisation of the legal profession. As the world embraces the gig economy, the legal profession should be no exception.” 

JOINING NEWLAW

Though ALSPs offer a new career option for lawyers, it’s not a path available to anyone, as ALSPs are looking for specific experience and requirements, both in terms of your CV and personality.

First, you need top-tier law firm training with at least five years of post-qualification experience. “This is not just for the legal knowledge, but also to make sure you’re financially ready, as the pay is not as much and nor as stable as that offered by a big law firm,” says Cognatio’s Hobbs. “It also has to do with whether you can adapt to different environments – can you work with a U.S. multinational company one day and then with a locally listed company the next?”

The prior experience also prepares lawyers to make decisions independently. Lawyers with less than five years of PQE tend to need hand-holding from a partner or a senior associate, says Hobbs. 

The five-year mark in a lawyer’s career is also the point when the emotional intelligence can be said to have developed. “They have the emotional maturity that when they get sent into a client’s office on a Monday morning, they are able to quickly understand how to operate in a different, often challenging environment, roll up their sleeves and get stuck in,” says Axiom’s Dougan.

Apart from time at a big name law firm, in-house experience is also a must. “The sector experience, particularly in the financial services sector, is pretty paramount,” says Hobbs. “It brings the practical commercial skills. Now the lawyer knows not just the letter of the law, but they also have the technical legal background, and is able to apply all of that to the client’s legal needs.”

Finally, there’s the personality aspect. “You've got to be a go-getter, you've got to be entrepreneurial,” says Hobbs. “Most lawyers aren't entrepreneurs – they haven’t needed to be. You need to actually enjoy thinking: ‘Right, I can spend three months here or six months there, and then I get a chance to work somewhere else.”

“We look for that desire to do something different,” adds Dougan. “We look for a kind of entrepreneurship – the ability to just get up and go, and the desire to try something different.”

Contract lawyer Q&A: ‘It’s not for people who want to take a break’

In conversation with Vivian Mak, a consultant at Axiom, who held previous roles at Allen & Overy and the Royal Bank of Scotland.

ALB: What’s the biggest difference between working in private practice and as a contract lawyer?
Mak: The perspectives are different. In private practice, the aim is to solve clients’ more technical legal problems. Whereas at Axiom, I am placed in a client's in-house legal team and the aim is to solve their legal and business problems."

As in-house counsel, you have to understand how the specific company and business works, and what legal options or solutions would work for the company. In private practice, it is more about knowing the law, and analysing it for the client (usually the in-house lawyer), who then make recommendations to their business people.

The biggest benefit is the autonomy. There is usually more trust placed in an Axiom lawyer because the Axiom lawyer is already an experienced in-house lawyer who has a few years under his or her belt. Also with Axiom, I have the ability to choose who I work with (but that works both ways, as both the company and the Axiom lawyer have to meet via an interview to see if there is a fit). The hours are probably different as well, as there are no more 12-hour work days when you go in-house.

Also as an Axiom lawyer, I am not in the "rat race" within the company, so to speak, so I can be independent and just focus on the quality of the work.

What were some of the biggest challenges you faced, or changes you had to make when you left private practice?
There was no challenge at all for me. I knew when I began my legal career that I was more pragmatic and business-minded than the average lawyer. I enjoy working with the business and other functions, so it was a very easy transition because I am a decisive person and I can make informed decisions and judgment calls without struggling much.

Perhaps, at the beginning as a new in-house lawyer, you need to have more conviction when it comes to your recommendations to the business. As a private practice lawyer, you can present a few more options, but as in-house lawyer, you actually have to pick one or two viable options and explain to the business why those options are optimal. You probably need to be more confident as an in-house counsel, which was a bit of a discovery for me initially.

What advice would you give to a lawyer considering leaving traditional firms for a life with more flexibility?
Be careful what you wish for. Life with Axiom is not an escape from a dreary working life. It is not for people who want to "take a break" because they will still have to perform at a high level. Clients will not expect anything less than the value that they paid for.

Also, you can expect a financial impact because you will be "on the beach" from time to time, and you will not get paid during those periods. However, most of the successful Axiom lawyers I know have serious entrepreneurial tendencies, and they all want to build something else (maybe a business or a serious hobby) in addition to their legal careers. So even if they are on the beach, they are still very busy with the other parts of their lives.

Even if the Axiom lawyer decides to get back to full-time work eventually, I am sure he or she will adapt quite easily as he or she has picked up so many new legal skills (Axiom lawyers will not necessarily only cover a niche area) while working for different clients, and will additionally bring a valuable innovative perspective to the employer.