Axiom Law Uses Ethics To Innovate

I recently read a wonderful law review article by Stephen Gillers, a professor at New York University School of Law, called A Profession, If You Can Keep It: How Information Technology and Fading Borders Are Reshaping The Law Marketplace and What We Should Do About It. In this article, Professor Gillers discusses the legal doctrines that helped give rise to alternative legal service providers such as Axiom Law. Most importantly, he eloquently explains how Axiom is using idiosyncrasies within the rules of professional responsibility to drive innovation.

It is worth reading the whole article (a full copy of the article can be found on Gillers’ SSRN page)but excerpts of a passage that I was particularly impressed by are reproduced below. Any and all errors are mine.

“In the 1980s, bar ethics committees were asked to address the growing phenomenon of temporary lawyers, now sometimes called contract lawyers. These were individuals admitted to the bar and hired to work on discrete matters for a limited period of time. A firm may have a large antitrust case and need many lawyers to sift through documents, but when the case or the discovery has ended, the lawyers will no longer be needed. The firm does not want to increase permanent staff. Of course, such an arrangement presents no problem whether lawyers are hired temporarily or retained as independent contractors. However, because these lawyers often work through employment agencies that receive payment, one question was whether the agency’s fee would violate the rules against splitting a legal fee with a nonlawyer . . . Bar groups concluded that the arrangement did not violate the rule against splitting fees with nonlawyers.See e.g., ABA Comm. on Ethics & Prof’l Responsibility, Formal Op. 356, at 47 (1988); N.Y.C. Bar Ass’n Comm. on Prof’l & Judicial Ethics, Formal Op. 2 (1989). . . The more challenging question concerned conflicts of interest. . . Eventually, bar ethics committees concluded that the lateral temporary lawyer could be screened even if the lateral permanent employee could not be screened.See ABA Comm. on Ethics & Prof’l Responsibility, Formal Op. 356, at 41 (1988).

 . . .

It could have ended there. But then an associate at a large New York Firm realized that the doctrinal authority for temporary lawyers and agencies that furnish them could also support assembly of teams of specialists, not merely individual lawyers to perform low discretionary work. (citation omitted). That associate created a company called Axiom, where such teams are available to work on particular assignments requiring greater skill and knowledge than generally required of contract lawyers. The teams can disband when their assignments end. Team members might then recombine, possibly with other lawyers, for a new assignment and so on. Each project can attract its own team depending on availability and expertise. Formally, each of the assembled lawyers is an Axiom employee working for a client on a temporary or contract basis. Members of the team do not have a formal relationship with each other. They do not comprise a law firm. But in reality, they will be chosen for their complementary skills. The work they do is more sophisticated than was true in the early days of temporary lawyer agencies and still true for many contract lawyers today.

. . .

Axiom owes its existence to these early bar association opinions on temporary lawyers. (citation omitted) It is not a law firm and would not dare call itself a law firm, although it is often described as such in press stories. . . One advantage of not being a law firm is that Axiom can be owned by nonlawyers. That means it can raise money in the capital markets, which law firms cannot do. To an outsider, Axiom looks like a law firm . . . So it has the best of both worlds. It manages to present itself as a law firm–now with a staff of 700 in eleven offices globally–while also enjoying the capital formation options available to for-profit enterprises. And by virtue of the temporary agency ethics opinions, its lawyers are able to form and disband teams unencumbered by the conflict rules that can hamper movement of traditional lawyers. (citation omitted).  Nor is Axiom beholden to a jurisdiction’s rules on lawyer advertising, although lawyers are. (citation omitted).

. . .

It is too soon to know if Axiom itself will survive or grow. But the business model has appeal. It offers ‘money people’ a way to invest in the law industry. For lawyers, work via Axiom is not necessarily a full time job. This can be attractive to the lawyers who need or want flexible schedules because of their work (or creative endeavors) or demands on their time (for instance, caring for children) or because they are semiretired or between jobs.”

See Stephen Gillers, A Profession, If You Can Keep It: How Information Technology and Fading Borders Are Reshaping The Law Marketplace and What We Should Do About It, 63 Hastings L.J. 953, 986-89 (2012) (emphasis added).

Professor Gillers discussion of Axiom’s business model led me to an important realization. The legal profession is attempting to regulate itself in a way that is completely inconsistent with the ethos of the forthcoming generation of lawyers. The ethics rules regarding contract lawyers seem to assume that (1) the best and brightest lawyers won’t want to be contract lawyers and (2) contract lawyers will never be able to do sophisticated work.

But as Axiom has already proved, both of these assumptions are faulty. Going forward, the best attorneys will expect and demand flexibility. Ask any “young lawyer” (i.e born 1980 or later) whether they would like a flexible legal job where they can scale their workload up or down depending on their personal situation or an inflexible legal job where they are expected to work the same number of hours regardless of their personal situation. I think you would be hard pressed to find someone that preferred the latter option even if you added that the inflexible legal job paid a higher salary.

If more of the “best lawyers” begin to enter “contract-lawyer” employment arrangements with alternative legal service providers then it is a given that more sophisticated legal work will be done by firms like Axiom. Clients want talented lawyers. They do not care what entity talented lawyers work for.

Disruptive Legal

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