Since the start of 2019, the Asian region has seen a flurry of NewLaw activity, highlighting that major financial centres like Hong Kong and Singapore are clearly top targets for these providers. 

In March this year, Vario, the NewLaw arm of Pinsent Masons opened in Hong Kong after hiring Kirsty Dougan as Asia managing director; Dougan had co-founded the APAC offering of NewLaw firm Axiom, and served as its regional managing director for eight years. 

This was just the latest recent development in the fast-growing flexible-lawyer space in Asia. In January, U.S. legal/tech provider Elevate acquired Hong Kong-based NewLaw firm Cognatio Law, which was co-founded in February last year by Lesley Hobbs, previously the head of client solutions in Hong Kong for NewLaw firm Lawyers on Demand (LOD). Herbert Smith Freehills will reportedly expand its Alternative Legal Services (ALT) business into Hong Kong soon. Vario opened in Singapore last year. 

And that’s adding to the players that are already here. The UK’s LOD, which merged in 2016 with Australia’s AdventBalance, now services the Asia-Pacific region. Eversheds Sutherland and Allen & Overy offer contract-lawyer services in Hong Kong and Singapore. Herbert Smith Freehills’ ALT is available in Shanghai and Beijing. Axiom has been a well-established brand in Asia for years now. 

According to Thomson Reuters’ Legal Executive Institute, the size of the alternative legal service providers (ALSP) market was valued at $10.7 billion globally as of 2017 – this includes the Big Four, LPOs, managed services and more. Of this number, the largest chunk ($1.2 billion) was provided by the Big Four, but NewLaw or contract-lawyer firms were not far behind at $1.1 billion. And given perennially tightening budgets, their revenue is only expected to grow.

Most of the major global NewLaw players have been based in more mature markets, but recent developments suggest the Asia-Pacific region is viewed as increasingly lucrative. Questions remain, however, about whether the market is ready to transition to NewLaw in a bigger way than it has earlier, and whether this heightening competition will dampen the prospects of individual firms. 

SPRAWLING, CHAOTIC

Libby Jackson, the global head of practice at ALT, says that it’s important to understand the world ALSPs and NewLaw practices operate in is a far more sprawling, chaotic place than one might imagine at first glance. While providers might expect to slot neatly into the market, the reality is a lot more fluid, unpredictable and uncharted than one might expect.

“There’s still a disruptive element,” she says. “For my part, disruption is often characterised by it all being a little bit grey. There being a lot of jostling for opportunity, and that it is exactly what makes the current state so exciting.”

For Kirsty Dougan, Asia managing director at Vario, the market is still an electric, dynamic place. Dougan, who spent eight and a half years trailblazing NewLaw with Axiom in Asia, says she is ready to bring her approach and expertise to a traditional law brand.

“I brought New Law to Asia, back in 2009, when I had my own business, and then I sold that to Axiom, and I focused on building up Axiom over the last eight and a half years. Since pioneering the model there’s obviously been a tremendous number of followers into the region, which is fantastic,” Dougan says, noting this “shapes demand, cements the category, and it provides choice for clients and lawyers, so I think that’s all immensely positive.”

Hobbs of Elevate calls herself a “NewLaw veteran” and says there has been a lot of consolidation in the wider market over the past 12 to 18 months. “Law firms have been following our lead in terms of providing flexible lawyering to their clients and we have also seen the entry of the Big Four firms into the law company space. In terms of my own journey, joining a company like Elevate had always been part of my strategic plan. It makes sense to team up with people who have the longer arms so to speak,” she says.

Hobbs adds that NewLaw is “no longer new” and that the legal services which a law company like Elevate provides shouldn’t be regarded as alternative. “Elevate might provide different legal services or provide them in different ways to say Baker McKenzie but the only difference is that Baker McKenzie is a law firm and we are a law company. Elevate has all the components to serve our clients which includes technology and managed services,” she explains.

CLIENTS DRIVING CHANGE

NewLaw firms aren’t the only ones pushing for change, as clients are also expecting these providers to up their game.

“There aren’t many clients who don’t ask us, ‘What are you doing about technology, what are you doing about innovation? How is legal services delivery changing? Show us what you’re doing to recognise change in the market,’” Jackson says.

In her experience, clients are increasingly quizzing the firm about their services. “There’s pretty much always a question coming from clients on the lines of: ‘How can you assure us you’re giving us value?’ And that’s the right question, they should be asking us that,” says Jackson.

Dougan has also noticed this push for a shakeup. There is a sense that “law firms have to change, and they have to innovate – don’t just have to, they want to,” she says, noting this has also trickled into the way lawyers work, and work with clients. 

“In the last two to three years, in particular, things have changed significantly. Flexible working, self-determination over your career – all this is not seen as Option B anymore. It’s actually something people seek out,” says Dougan. “People want to do the legal work, but they want to be free from business-development politics and the jacket-on-the-back-of-the-chair culture. I think that this now really resonates with people in this region.”

RISING COMPETITION

As competition intensifies, differentiation is key. All NewLaw firms have their elevator pitches, and their own ways of tackling the changing market, yet steadfast client relationships, and unique market positioning and perspective are consistently considered key advantages.

“There are a number of ways we differentiate in, including in terms of value,” Dougan says. “I feel my experience is unique. I am able to marry my eight-and-a-half years at Axiom and my entrepreneurial experience with an international global law firm platform, and that is very compelling.”

“I think it goes back to the reputation of the firm, but also of the individual who is running the form. In Asia, there is a lot of emphasis on relationships and your own individual reputation,” she says. Dougan adds that here “high profile” in Asia has also gained her a strong network of relationships and clients that trust her, and of course, pricing is always a consideration too. 

Hobbs, who says she has a proven track record in the market herself, is confident of Elevate’s uniqueness, calling it “a rounding-out-of-the-market” offering. “It is 360 degrees of service but limited to the legal sector. We can provide a multi-disciplinary service in terms of managed teams, legaltech, flexible lawyering and consulting. We have got near shore and onshore coverage in every geographical region – Americas, Europe, Asia and Australia,” Hobbs says.

Meanwhile, Jackson, who boasts a breadth of experience across alternative legal offerings globally is a happy beneficiary of the wider Herbert Smith Freehills network, in addition to her own connections.

“If I was a standalone alternative legal services business, I would not have access to those relationships and relationships are key in business incredibly so in Asia. So, I suppose on the advantages of being a captive, which is what alternative legal services within Herbert Smith Freehills is that I get the benefits of all the relationships of partners around the world with clients who are interested in how alternative legal services can support them,” she says.

To contact the editorial team, please email ALBEditor@thomsonreuters.com.