Managed legal services: the way of the future?

November 15, 2013

gavel and scaleAmid concerns that the traditional business model for law firms may be irreparably broken, some companies — companies that cannot always be accurately described as law firms — have found new ways to thrive.

One such enterprise seems to be New York-based Axiom, a “legal services company.”

To wit: According to an article in the Houston Business Journal, Axiom’s Houston location started in 2012 with three attorneys. It now has 30 attorneys and plans to add 15 more over the next year. The growth of its Houston office mirrors the expansion of the company as a whole. Legal observers have watched with interest as Axiom, a new and unusual creature in a kingdom with a very traditional population, has grown at a time when the legal industry as a whole is languishing.

What is different about Axiom? Its lawyers are salaried, so there is no hourly bill rate. Also, there is no “junior associate” position, which seems to make the firm less stratified. Perhaps most importantly, although it does have attorneys on staff, the company does not give legal advice. Rather, it seems to focus on handling legal projects that clients knew about in advance and do not need to be counseled on; routine legal work, one might call it. (Axiom’s preferred term seems to be “managed legal services.”)

“We have the ability to really help clients blend the business of law and the practice of law,” the general manager for Axiom’s Houston office (who, it is worth noting, is not a lawyer) told the Business Journal.

Given that the traditional law firm model is sometimes criticized for not being “businesslike” enough, it seems this emphasis on business is what is helping Axiom succeed, but it is also a source of potential future growing pains. If Axiom ever wanted to go public, there is a chance it could run afoul of Rule 5.4 of the ABA Model Rules of Professional Conduct, which prohibits the sharing of legal fees between lawyers and nonlawyers. If Axiom cannot go public, then it might face some of the same expansion and development issues that have kept law firms in their restrictive shell.

Because of the changes that the legal industry has seen even in just the past five years, the next decade or so is likely to be a turbulent one. The role that nontraditional law businesses like Axiom take, or do not take, will be of particular interesting.