As CEO of Plexus and of Legal Gateway, Andrew Mellett is on a mission to transform the value of legal services. Co-founding the company in 2011, he now leads a team of lawyers, technologists and engineers across five countries in building what has been described as a game-changer for legal operations.
Plexus launched Legal Gateway, the world’s first legal operating system, in 2016, and already it’s being used by in-house legal teams at over 200 of the world’s largest organisations including L’Oreal, Samsung, Woolworths, Spotify, General Mills, Coca Cola and General Motors. Driving this growth is a fresh approach to the law coupled with the world's most advanced legal technology.
Plexus has been profiled as a case study in the disruption of the professional services industry by HBR, INSEAD, ACU, and RMIT, and Andrew’s thought leadership can often be found published by Gartner, as well as in the AFR, Sydney Morning Herald, ABC, Lawyers Weekly and The Age.
What was the impetus behind starting Plexus Legal?
We believe the law is the best mechanism humans have developed to guide society down a relatively positive path. It provides certainty, access to justice, and is the connective tissue of economic value creation. It has also traditionally been slow, unpredictable and incredibly expensive.
We want to create a future where access to the value that ‘The Law’ provides is as easy, efficient, and reliable as turning on a tap. And we want everyone to win from that.
We believe that business, when done right, is a powerful lever to reshape and improve the world. We saw an industry where both clients and lawyers were unhappy with the paradigm, and we knew there had to be a better way. Our core philosophy at Plexus remains centred on an approach to business where ‘everybody wins’.
How would you define innovation?
It has been interesting to watch words like ‘innovation’ move from outside of the legal lexicon just a few years ago, to worlds that are now frankly abused by marketing teams to try to differentiate largely homogeneous legal services. In the most part trying to identify what is innovative about most claims requires you to peer down a long corridor filled with smoke and mirrors to see a pin head. Sadly, as a result, many people are now highly sceptical of ‘innovation’.
For us it’s simple. Indeed, it’s business as usual. ‘Better Way’ is one of our cultural values. For all the hyperbole around it, we just see it as finding better ways to deliver value our clients - while improving the employee value proposition for our people.
As a result of this consistent focus we have the legal industries highest NPS, and 95% of people on our team would recommend Plexus as a place to work.
While there continues to be new legal service companies that are getting attention, Big Law continues to do well financially. Why do you think this is the case?
Back in 2013 we wrote a blog that went viral called Why Big Law will Fail and Fade Out. In it we applied a framework from Stall Points by Matthew S. Olson and Derek van Bever (one of the top strategy books ever written and rated as the best management insight of 2008 by HBR) to ‘Big Law’.
Although many of the largest firms in the world have indeed shrunk considerably over the last five years, it would be easy to point to record PEP at large firms as a sign that our predictions were inaccurate. However, one of the keenest insights from the analysis behind ‘Stall Points’ is that businesses that ‘stall’ actually ‘accelerate into the stall’. This was the case with ‘white-shoe’ law firm Dewey & Le Boeuf’s failure - they had record revenues the year prior to closing their doors.
This may seem counterintuitive, however what often happens in business is that boom years mask structural failings in businesses due to ‘all ships rising with the tide’. It’s only when the cycle reverses itself, and the tide goes out, that you get to see ‘who has their pants on’.
It’s likely that we won’t see a rapid or systemic structural shift in the industry until the next downturn (likely in the next couple of years). Even then we don’t forecast mass failure of large law firms - they will have an important role to play for some time. However, most of them will simply ‘fade out’ and become far smaller ‘super premium boutiques’ over time.
In the interim, history certainly appears to be on the side of New Law, Technology and other legal services models.
How have Australian law firms and law departments embraced new ways of delivering legal services?
‘The Law’ has profited for a long time from information arbitrage (i.e. “we know the law, and if you want to access that knowledge you need to pay us a premium and deal with a heap of eccentricities/inefficiencies built into our model”). This, however, is at odds with the market’s demand for ‘more for less’. The good news is that through a confluence of technological change and deregulation, this information asymmetry – and the business models it supports - is rapidly dissolving.
Both in Australia and abroad, we’re observing the following trends:
Trend 1: Technology will inherit the earth
You can now Google a legal question and get a reasonable answer, or you can get onto our Legal Gateway platform and get a legal task done in 10% of the time it used to take, for a fraction of the cost. This trend is only beginning. Indeed, our research points to the fact that GCs are intending to increase investment in technology 252% over the next two years. However, the majority of technology spend in the legal industry is still within law firms – deployed with the goal of maintaining their margins.
Trend 2: The rise of law firm alternatives
New Law is not the new news it was when we began almost eight years ago. Indeed Eric Chin from Beaton didn’t coin the term to describe us until three years ago. However, the ‘Cambrian Explosion’ of alternatives is really only just beginning. Whether it’s secondees from our own Plexus Engage, Legal Services as Software Solutions (like Promotion Wizard, where 90% of the value is created by technology and the ‘last mile’ is done by lawyers), off-shore or one-shore LPOs, the rise of Big Four Big Law accounting firms or of course the rapid rise of Legal Automation, the march of new models to deliver better value is just beginning.
Trend 3: Legal Transformation
While executives in HR, Finance, and IT have been leading ‘transformation’ agendas for over 20 years, GCs have largely been so buried in ‘business as usual’ work that they haven’t had the bandwidth to drive a large-scale change agenda. As a result, most legal functions remain ‘in-house law firms’ and their functional maturity dramatically lags behind their peers.
This is changing rapidly. 65% of GCs rate ‘delivering faster, better and more cost effective legal support’ as their top priority. As a result, Legal Transformation is now the top agenda item for progressive GCs. Evidence of interest in this subject can been seen by the incredibly rapid rise in organisations such as CLOC who have grown from a handful of members four years ago to thousands in 2019.
Our research into Legal Transformation suggests that leading GCs are focusing on five key priorities:
1. Increasing the productivity of their lawyers – largely through the adoption of technology
2. Rethinking organisation design (e.g. establishing Legal Operations functions)
3. Adoption of performance management and analytics
4. Improving the management of information (e.g. adopting Contract Life-Cycle Management, Matter Management, Knowledge Management)
5. Evolving the competency mix within their teams from a focus on ‘technical excellence’ to emerging skills centred on ‘business partnering, project management, & technology adoption)
To someone seeking to start a new legal services company, what would be your one piece of advice?
It’s hard. As, perhaps the world’s most successful serial entrepreneur Elon Musk says ‘starting a new business is like staring into the abyss while chewing glass’. This is the case for any business.However, for those that are trying to do something ‘innovative’ this is magnified 10X.As legendary VC Ben Horowitz says ‘[the risk return means] it’s not worth it for the money. But it might be worth it for the personal development that occurs as a result of doing something so hard.