In her Q&A with the In-House Community, Axiom’s Kirsty Dougan gives her view on the legal industry and explains why she felt it needed an option beyond those that were on offer.
ASIAN-MENA COUNSEL: Please describe the services that Axiom provides as well as its genesis
Kirsty Dougan: Axiom is the world’s leading provider of technology-enabled legal and contracting services. Our solutions combine legal experience, technology and data analytics to deliver work in a way that dramatically reduces risk, cost and cycle time. The firm comprises 1,500 legal consultants and professionals, process engineers and technologists who serve over half of the Fortune 100 across 15 offices and five centres of excellence globally.
I’m a lawyer by background and from 2006 to 2009, I worked in Shanghai as Senior Counsel for Diageo, where I led the first foreign investment in China’s domestic spirits industry and both started and built the company’s legal function for the Greater China region.
In 2009, I co-founded a business in Hong Kong called Asia Counsel which I later sold to Axiom in 2010. Since then, I’ve been responsible for the growth of the business in Asia and opened Axiom’s first Asia office in Hong Kong, followed by Singapore in 2011, where I am, as Head of Asia, primarily responsible for leading the client side of the business.
Axiom was originally started in 2000 in New York by our CEO Mark Harris, who had previously been an associate at Davis, Polk & Wardwell. While there, he was asked to prepare a client’s monthly bill. Putting it together, he realised the charge was equal to his entire annual salary. From that point on, he was obsessed with making observations about things that seemed inefficient and wasteful.
The question he kept coming back to was: in a world where everyone is trying so hard to be efficient, why does the legal industry – one of the world’s largest and most important service economies – get to be inefficient? That inefficiency translates into a staggering level of hidden cost to consumers, shareholders, and the great majority of people who work in
the industry.
Since founding the company in 2000, Mark’s mission has focussed on plugging Axiom legal consultants into clients’ existing infrastructure and handling complex, sophisticated work, either onsite or remotely. The model eliminates traditional firm overhead and flattens pyramidal economics, thereby reigning in costs. Having built a legal department for Diageo in the region, I could readily identify with that.
In August of 2008, of course, the financial system imploded. Investment banks comprised over 60 percent of Axiom global revenue and four of the nine the firm served dissolved or merged out of existence; Axiom began to shrink.
So, we diversified our client base in the US and UK and opened offices in new geographies to support that diversification (opening in Asia for example five years ago with the purchase of Asia Counsel), as well as adding legal process outsourcing to our list of services. Most importantly, together we capitalised on a newfound willingness among General Counsel to break (finally and meaningfully) with tradition, and find more innovative ways to handle larger volumes of work, leading to the launch of our contracting practice.
Through that contracting practice, we are challenging the incumbent model of legal delivery in a more profound way than ever before. The incumbent model is artisanal: highly paid, intensively trained artisans attack each task anew. That’s perfect for novel challenges that are irreducibly complex, but not so effective for the vast majority of legal work (like contracts) that’s comprised of high volume transactions.
Today, many companies still operate with a first-generation approach to the contracting process, governed by a ‘more is more’ philosophy: contracts are negotiated by experienced lawyers; the better the lawyer, the better the outcome. Increases in contracting volumes have meant commensurate growth in the number of (expensive) lawyers required to manage growth.
This approach has led many legal departments to a hard-to-organise mass of hundreds of lawyers, negotiating thousands of contracts using inconsistent policies and processes, and then storing them in various sharepoint databases that don’t enable ready access to the crucial data they contain. I’ve had direct experience of that approach which can be incredibly inefficient.
A better way is to introduce process and technology to the contracting function and that’s why I joined this firm. In addition to insourcing, we now also help clients, not just in the US but in Asia too, reimagine contracting (from creation to negotiation to management) as a strategic part of their business and not a mere cost-centre.
AMC: Having co-founded a business, as well as being a lawyer, you’re an entrepreneur. Do you believe this mindset is necessary in order to work in a new model firm, as in order to do so you have to not just think, but re-think?
KD: Absolutely. Entrepreneurs disrupt and challenge the status quo – that is Axiom’s mantra. How do we solve our client’s underlying business problem? And how do we re-design the typical legal delivery model to accomplish that goal?
The key is to understand that often legal problems do not have a legal-led solution. Take again the example of contracts, wherein many companies still operate with a ‘more is more’ philosophy: contracts are negotiated by experienced lawyers; the better the lawyer, the better the outcome. Increases in contracting volumes mean commensurate growth in the number of (expensive) lawyers.
For years, companies have tried to solve complex legal problems with more lawyers, when the right answer is often fewer. High volume contract operations don’t call for a legal-only solution. They require a combination of technology and processes that allow a pyramid of negotiators and subject matter experts to work under a smaller pool of strategic lawyers who set policy, anticipate important risks and provide high value counsel to their business clients.
So yes, employing talent with entrepreneurial backgrounds has certainly helped Axiom grow – the entrepreneurial mindset pre-disposes you to challenge existing (and often un-ideal) paradigms. But so too has employing a wide range of consultants, technologists, process engineers etc. who can think through legal challenges from fresh and varied perspectives enabling real innovation and real solutions to our clients’ underlying problems.
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AMC: In your experience, how should GCs be thinking about staffing their departments? According to our statistics, while multinational company GCs seem less interested in the opportunity presented by law firm secondees, local companies see it as more of an opportunity. Can you share any direct experience that may prove helpful?
KD: That may be true in terms of law firm secondees but our multi-national clients are certainly very keen to leverage our insourcing capability in Asia to support their legal teams. In general terms, General Counsel should be thinking about value in staffing their departments. When the objective is value (better quality at a reduced cost) it requires not only great talent, but also changing management, best practices, process re-engineering, technology and the ability to harmonise all of these things in a (new) delivery model that stands up to intense scrutiny.
Most General Counsel have historically seen the two primary components of their job – managing risk and managing cost – at odds with one another. That way of thinking finds its roots in the industry’s obsession with pedigree, associating quality control with the resume of the lawyer doing the work. Pedigreed lawyers are expensive and so, says this logic, if you have less money, you’re going to get less pedigree and more risk. If a GC feels that they are being asked to make a zero-sum trade-off between cost-mitigation and risk-mitigation, they will always choose risk-mitigation.
But I think the well-kept secret of the legal industry is that the trade-off isn’t necessary to make at all. Indeed, at Axiom, we offer our clients value by breaking the paradigm for the way work is delivered.
Specific to our insourcing practice for example, that means hiring talented legal consultants in Asia who become fully embedded in our client’s business at rates un-bloated by pyramidal and overhead padding.
And through our contracting practice, we deliver improved economics via a combination of better productivity, including reduction in rework and errors, better alignment of work with seniority of the team members and a utilisation of lower cost locations. Importantly, this balance is achieved without forcing clients to make the cost/risk trade-off; the methodologies and tools that we use simultaneously improve both risk and cost (i.e. value).
AMC: What are some of the challenges facing GCs currently and what successful solutions have you seen deployed?
KD: Life for the GC is increasingly complex, particularly so in APAC. There are more risks to mitigate (explosion of electronic data, privacy concerns, cross-border issues, heavy regulation, intense earnings and organic growth pressure coupled with complicated revenue recognition rules etc.). At the same time, the post-2008 economy means managing cost is a more prominent part of the job than ever before.
The innovative and successful GCs I have seen over the years in this region have learned to mitigate risk by applying a tech-enabled approach to volume-centric work, enabling them to actually improve risk while re-aligning in-house talent to the more strategic, artisanal work that demands its attention.
AMC: Do some of your referrals come from law firms? If so, what advantages does engaging Axiom have for law firm managing partners and department heads?
KD: Typically not. We have a very different model from a law firm although we do have professional indemnity insurance for all our consultants. Even where those law firms have secondment-based practices, our approach to insourcing is quite different in that we pioneered a practice wherein secondments are the primary service model, not an ancillary service performed reluctantly.
All our consultants have extensive in-house skills and are very commercially minded, which is of course essential for in-house roles. Moreover, we don’t parachute someone in and then leave them to it. We have a very hands-on management engagement process, which has led to a track record of successful projects that keeps clients coming back.
AMC: What do you think the next five years hold for profession generally and in-house departments in particular in Asia?
KD: Law firms and law departments are artisanal by culture, but many of the challenges they face are increasingly volume-centric in nature. Of course, there will always be extraordinary, bet-the-company matters that require the imprimatur of a large firm and the delicacy of an artisanal approach. For the rest of the industry, however, it’s time to remove our reliance on the application of individual judgement, in the moment, and instead focus on the application of rules informed by collective judgement and knowledge capture resulting from having engaged in that same activity hundreds, if not thousands, of times prior.
As an industry – in Asia and globally – I think we are very much at the precipice of change. It’s up to all the participants within that industry (alternative providers, law firms, law departments) whether we work together, embracing the future and collectively driving transformation or fight at the boundaries of competing skillsets and further stall industry advancement. The latter can’t be in the interest of our respective clients.
AMC: How does Axiom measure success?
KD: Well, as I explained at the outset, Mark founded Axiom in New York on the premise that the firm/client relationship is broken, with both sides palpably frustrated by the value disconnect. It’s been our global mission to fix that, by addressing the fault lines inherent on both sides of the consultant/client relationship.
For that reason, I think success is measured across two dimensions: happy clients, happy talent.
We’ve been well-recognised for our efforts with clients: reinventing the firm via a streamlined cost-structure, implementing a flat-fee approach and developing a contracting practice to help clients manage high volume legal work more effectively.
From the perspective of the consultant, we’ve also been a significant driving force in creating a ‘third way’ beyond the simple choice between private practice and in-house. Axiom offers a distinctive career proposition designed to ensure that talented consultants are able to continue to do blue-chip work, but with a high degree of self-determination over their career.
