Biglaw

UnitedLex Luthor

Meet the alternative legal service provider bent on taking over the world.

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(Image via Getty)

Dan Reed is the most compelling kind of supervillain; the one who believes that he’s actually the hero. To be fair, he very well might be.

Reed is the CEO of UnitedLex, an alternative legal services provider bent on disrupting the basic fabric of the global legal market. He’s got an origin story straight out of the comic books. Reed made all the money he’ll ever need early in his career after growing and selling out of two successful companies. With his financial future secure, Reed set about dreaming up a project focused on personal meaning. His solution to this was UnitedLex, a company he believes will break the chokehold of Biglaw and democratize the legal practice.

Reed’s got the ideas, the platform, and the financial backing. UnitedLex is developing big-name clients like GE and DXC, and partnering with major firms like Latham & Watkins. Per their PR Department, they closed $1.5 billion in deals over a recent 18-month period. They have all the appearances of an industry giant in the making. So are they a force for good, or something else?

Beyond The Wall Of Biz-Speak

One could be forgiven if they read UnitedLex’s press releases for hours and still walked away with little idea of what the company actually does. According to its mission statement, UnitedLex “drives transformation” while “searching for the ‘art of the possible.’” One press release describes legal services as “one of the few remaining verticals that is early in the penetration curve of technology, consulting, and solution delivery.” But behind the wall of marketing and business clichés, there appears to be serious substance wedded to global ambition.

The basic structure of the company is threefold. First, it’s a consulting company focusing on helping in-house legal departments develop efficiencies and utilize technology. Second, it’s an engineering and technology company actively developing solutions to sell to those in-house departments. Finally, it’s a legal staffing solution. It supplies lawyers on an as-needed basis to clients ranging in experience and sophistication from highly experienced senior attorneys down to newly minted law grads working remotely out of coffee shops. Many of its attorneys are based outside the U.S. in India.

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On their own, none of these concepts is particularly groundbreaking. In some ways it’s just a more focused version of the efforts the Big 4 accounting firms have been making to bring their consulting expertise into the legal space. But where the Big 4 have their hands in a lot of pots, UnitedLex is focused exclusively on the legal market.

It seems to be paying off. One of Europe’s biggest equity funds, CVC Capital Partners, announced a few months back that it was purchasing a majority share in UnitedLex, reportedly for $500 million. UnitedLex also claims to count 25 percent of the Fortune Global 500 companies among their clientele, and recently inked a massive deal with Ford Motor Company to transform their IP department from a cost center into a revenue generator.

So what part of successful entrepreneur developing a tool people want qualifies him as a potential supervillain? It’s the method behind the madness — or brilliance, depending on your vantage point.

It’s All About The Labor

The unfortunate reality of the legal market is that our costs of doing business are mostly labor-related. It doesn’t cost much to rent an office, buy a computer, and get to work. Where legal departments spend their money and time is on human expertise, and that’s generally expensive.

Sponsored

What UnitedLex appears to be doing, better than potentially anyone, is cutting the cost of labor. For example, their “Contract Room” platform breaks major deals down into subcomponents and stages, then assigns the components out based on the expertise necessary. Whereas in a traditional law firm a single experienced attorney might oversee all aspects of a deal, at UnitedLex that experienced attorney handles the top-level negotiations, while a team of outsourced law school grads working for 1/10th the price may handle the more routine aspects of the transaction.

Clients have every reason to love this approach. It’s bottom-line and efficiency oriented, something everyone should strive to be. But do you see any human element in that interaction? This kind of model necessarily treats attorneys as cogs to be slotted in where appropriate and replaced as needed. If UnitedLex’s structure is closest to the Big 4 accounting firms, its actual practices are basically Lyft for attorneys.

This is very much by design. The democratization of the legal market Dan Reed is striving for means opening it up to the industry’s newbies and have-nots who didn’t make it into the traditional firms. UnitedLex has relationships with a number of law schools where it places simple work with newly minted grads. The grads develop practical experience and expertise they wouldn’t otherwise get, and everyone makes some money. Attorneys without experience, without clients, who otherwise would struggle to make ends meet, now have a chance to do legal work and get paid.

What Biglaw Gets Right

But does UnitedLex lift up those inexperienced attorneys and develop them, or is it simply creating a permanent servant class within the legal job market? Biglaw is rightly criticized for many, many things, but one inherent virtue of that system is that it benefits when it develops its talent pool. A firm can make a bit of money off a third-year associate billing for other attorneys. It makes a lot more when that third-year turns into a rainmaker themselves, developing their skill set and bringing in clients to match.

UnitedLex doesn’t have that same incentive. The client relationship lies with the company itself, not its staff attorneys, and it treats skill sets as ultimately fungible. A young attorney growing their skill set just means that attorney has to be staffed onto different matters, and the company needs to find someone else to handle the simpler tasks. Barring an altruistic motive to do the right thing, the company gains nothing from staff development except some administrative headache.

There’s also the problem that nobody gets rich driving a rideshare. In fact, once less apparent costs like depreciation and repairs are accounted for, many drivers are making less than minimum wage. Some outright lose money. The biggest winners of the Lyft and Uber revolution are Uber and Lyft themselves, and the public that now has access to cheap, fungible, convenient ridesharing. The drivers who generate all that benefit get just a sliver of the pie. I worry about that same dynamic transferring over to the legal market. Everyone in the UnitedLex model seems poised to win big, except the lawyers actually making it all possible.

Whose Story Is It?

It’s easy for me to air these kinds of concerns because if UnitedLex is Lyft, law firms are the traditional cab industry that Uber and Lyft have attacked. UnitedLex is a competitive threat to me, and thousands of Biglaw attorneys across the world.

Yet I don’t think my reaction is entirely based on self-interest. I wouldn’t be where I am today without the mentorship and growth opportunities that the law firm model provided me. Done right, the law firm model becomes about more than making money. It’s about passing down knowledge, skills, and an ethic to a new generation, helping people bootstrap themselves into a successful career. I struggle to see UnitedLex or any of its many competitors doing the same. While it may make its clients or shareholders wealthier, it may make our profession poorer.

Dan Reed might be the supervillain of this story. Or Biglaw might just be the henchmen the hero needs to do battle with in service of the greater good. Either way, UnitedLex is spoiling for a fight, and set to do some damage.

James Goodnow

James Goodnow is an attorney, commentator, and Above the Law columnist. He is a graduate of Harvard Law School and is the managing partner of NLJ 250 firm Fennemore Craig. He is the co-author of Motivating Millennials, which hit number one on Amazon in the business management new release category. You can connect with James on Twitter (@JamesGoodnow) or by emailing him at James@JamesGoodnow.com.

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