#BakersDozen is a series of interviews with leading professionals in the fields of law, consulting, finance, tech, and more.
Tell us a bit about yourself and how you came to be in the legal business.
I am a Chartered Accountant by background. I trained at KPMG London and moved into corporate finance and due diligence work early on (auditing really wasn’t for me). I then moved on to Bridgepoint, a large private equity fund. Initially, I worked on troubled investments as a board member trying to fashion improved performance or to restructure the investment to provide some upside. I then moved on to deal-doing and invested around $400m in five years.
I had been doing deals in the outsourcing space and was looking to do my own thing. The fact that legal had low penetration of outsourcing made me realize that for an industry to increase profitability and efficiency, they had to adopt better, lean working and outsourcing practices.
I took the leap and set up Exigent in 2003. The business now has offices in the UK, India, Australia, South Africa, Canada and USA.
What do you do for a living right now?
I am the CEO of Exigent, where I am supported by a great team. My principle aim is to consider how to continually reshape the business to make the most of the changes in the industry.
What have been your greatest triumph and your greatest success in the legal services field and what did you learn from each?
Start-ups are harder than you think: hats off to anyone who has done it. We also acquired an Indian tech business in 2013 and successfully integrated it into the operations. Not without its challenges of course: it is one thing spending other people’s cash, quite another when it is your own! I now have 150 great new colleagues there and some really talented techies. I am not sure I can take much credit because much of the hard yards were done by the senior leads in the two teams.
Do you think the legal industry is headed in the right direction, the wrong direction – or which direction
It depends on what you mean by the legal industry. When it comes to law firms there is a structural and cultural problem that will always hold firms back. At the base of it is the financial structure where partners will always want immediate and highest possible return each year as there is no way of building value.
Any real change of model is held back by logical self-interest. Owners of companies will sacrifice short-term income to reinvest in products or services that will drive capital value higher. Sure, firms are making some limited innovations; however, I am not really sure – apart from a few notable exceptions – that there is a clear direction.
In-house legal, of course, is different, but these buyers of services have law firm training and culture in their blood. There are those that are fantastically innovative but many don’t really have much appetite to upset the apple cart. I see more appetite in companies that are tech-focused and have an innovative culture, such as Hootsuite in Canada.
I have been to numerous conferences and hear the same conversations over and over: a desire for change and tech adoption but a lack of budget or time to actually adopt them. Often the ‘inbox is too full’ holds people back. There are some bright spots in areas such as litigation but, if there is a direction of travel, it is glacial and hard to discern.
Then there are the new entrants, and this is where it gets interesting. Tech that is well funded – $3.5bn in the US in legal technology tells a tale – and open-source software are making the cost of solutions to problems and challenges accessible to innovators.
Whereas before people thought about software in terms of big budgets, costly implementations and hard to prove ROI, now cloud-based applications can be acquired and deployed cost-effectively. Putting together complete answers that can be easily deployed is a healthy alternative to trying to get IT budget to buy a system and deploy it. A good example of where this can be done successfully is contract extraction and analysis managed as a service.
Learn Excel, understand basic coding and think about the ‘business of law’ because in the commercial legal space these will be highly prized.
You are known for innovation and have been an inspiration to many. Who inspires you – and why?
For me, innovation is the symptom of a rather restless mind which I am sure made me a rather painful child and frustrating colleague. I take much inspiration from sports, in particular British cycling, which came from deadbeats to world beaters in 15 short years. One of the men behind this is Sir Dave Brailsford who really believed in the idea of marginal gains. In other words, rarely do you find 10% gains at once; rather 20 small things that together generate dramatic improvements. This principle was also adopted by Sir Clive Woodward, the World Cup-winning rugby coach.
What advice would you give to the younger generation contemplating law as a career?
I think you have to recognize that, regardless of what fees you have paid, law degrees are very narrow in today’s changing society. Any degree that doesn’t recognize that data and numbers drive the world is anachronistic. I struggle to see that even a base-level understanding of technology is OK for the fee paid.
My strong advice is to try to do an internship at a company that has these attributes. Learn Excel, understand basic coding and think about the ‘business of law’ because in the commercial legal space these will be highly prized. The knowledge that what students have spent years learning, is now widely available and this is the start of the curve.
How deep do you think will be the inroads of technology in the industry?
I think it will be deep and pervasive as with other white collar professions. Once auto-extraction and machine-learning really take off – and we are in the hangar right now – then well architected solutions will affect – in order – consumer law, commercial law and finally public law.
The winners will not be developers; it will be the solution architects. The human winners will be those who understand how to deploy these effectively and deliver tangible benefits. It will not be the law firms that win, but in-house counsel, and, most importantly, the businesses they work for that will see tangible commercial gains.
In 10 years, do you see an industry much as it is, or do you see new players, new technology and an altered state?
I foresee law firms will remain much the same, rather Canute-like – with some notable exceptions of course – but having pretty much exhausted cosmetic counter-measures, many will realize that after 10 years of low growth and declining margins they will have to consider a new plan. Many will spawn specialist boutiques – remember 60% of law firm work is local – rather than aggregate.
I think the alternative models will continue to grow, but the successful models will be the ones who have the answers to common problems and deliver fast, using attractive pricing models. There is the potential for these to be highly profitable.
For in-house legal departments, I foresee a growing integration with the rest of the business, especially finance, IT and procurement. The use of data to make informed decisions is in its infancy but, as practical applications that demonstrate value emerge and the benefits of collaboration become clear to the ‘C-Suite’ – I really don’t like that phrase – they will want to avail themselves of the benefits.
The challenge is to build integrated solutions that can easily be deployed, and deliver an obvious ROI.
Are consultants and lawyers looking increasingly similar? Should the distinction continue?
I don’t see it like that, and frankly, I see no role for the current generation of lawyers as consultants, as I so define them. I have met only a handful of lawyers with the skill set that suits a McKinsey type offering. Consultants need numerical, analytical and process skills. Many lawyers gave up math at 16, can’t use Excel and think that ‘lean’ is a celebrity diet. We train our attorneys with these skills if they have the aptitude, but the training period is around two years.
What are your thoughts on the increasing availability of data to guide client-side procurement of legal services?
I think it is a great opportunity, I really do. AIG in New York have centralized their analysis of spend – $2bn – or 0.5% of the US market – and generated hundreds of millions of dollars of savings using analytics. The head of data is a chemist, not a lawyer. There is a lesson in there somewhere…
Data on likely outcomes will sweep away the ‘grey hair = wisdom’ myth, much as Billy Bean did when he transformed the Oakland As in the 1990s, characterized in the movie Moneyball.
Much more powerful is the data that legal has access to, especially commercial data in contracts. Never mind legal services – say 2% of a firm’s budget – the real money is in aggregating the commercial pieces of information and using them to make decisions that are quantitatively informed. There is probably 2-4% to be added to the bottom line here. Legal teams are sitting on a goldmine.
Lawyers have typically regulated to keep non-lawyer investors out, but that’s a two-edged sword these days. What are your thoughts?
Frankly, it is self-serving protectionism that is going to fail. Already large corporates who are not regulated are deploying tech and alternates which could maybe be classified as law. The regulators are a laughing stock. Wherever you look, the Big 4 accountants are encroaching on the space. I don’t see that ethics have a single thing to do with it. No-one buys the ethics bunkum: all you need to do is Google lawyer jokes and see how many results you get!
What’s the one most significant factor that will drive change in your view?
Technology provided by solutions providers. These don’t need to be just small start-ups; firms like Microsoft and Google are encroaching on this space. Google’s Biscuit bill is likely to be twice the budget of most law firms’ innovation budgets. Microsoft will crack discovery and search capabilities far faster than we can imagine and with that there will be a whole host of spin-off opportunities.
Are we seeing the demise of the ‘profession’ and the real emergence of the ‘business’ of law?
I think that is true of all professions really. Remember, profession is a vocation, career or calling as I see it. The future of all so-called professions will change beyond recognition. I am not sure many people join the professions for anything other than a sense that job security is attractive. I am an ACA and when I joined KPMG it wasn’t my calling. Being honest about it, it was a pragmatic choice that I hoped would help deliver the standard of living I aspired to.
All professions must exist in the business-related environment. And I applaud the broadening of opportunities rather than the narrowing.
What do you consider is the greatest challenge facing the industry?
The industry continues to produce graduates not fit for the business of law. This is disaster for these indebted kids. They are seduced by high starting salaries and don’t realize that they are signing up for a system that will bleed them of every scintilla of energy and not make them fit for the future.
More broadly, the lack of a coherent strategy to address the lack of capital to really build out successful existing firms. The regulators have no business in limiting the financial and commercial opportunities for attorneys to build capital gain. The water lapping at the feet of Canute will rise and get a little chillier.
What do you see as the greatest opportunity for the sector looking forward?
Data; pure and simple. Embrace the information that is locked away in impenetrable ways, and embrace the business of law. I think there is an opportunity to genuinely add value by collaborating with other business units and cast off the idea of being the last line of defense against catastrophe.
Do you think the law can improve its track record on diversity and inclusion? How?
This isn’t really one for me. I can only speak for Exigent. I am the only white male on the Board!
Will the current regulatory framework around law help or hinder it in the future?
The regulatory framework in all countries we operate in is out-of-date and entirely built to serve the interests of lawyers, not consumers. Consumers have no voice, and, as a result, even less interest in engaging in the future of law debate.
Embrace the information that is locked away in impenetrable ways, and embrace the business of law.
Who do you think are the greatest influencers on the industry these days?
Hard one; I think it is so diverse and fragmented I don’t think I can point to one. But watch out, the accountants and tech giants are coming. I expect these to shape the future very significantly.
If you had to do it all over again, would you? Or what would you do differently?
I would buy a bar in Spain. Then again I tried that and it wasn’t my finest decision…
Quite honestly, I wouldn’t swap the experience of building and working with my team. This is a time of change and there isn’t a day that goes by where you don’t question what you are doing and whether how you are doing it is the right or best way. That’s pretty fun. I wouldn’t swap my team for anything.
Differently? I would probably have embraced tech earlier. I wish I had been smarter and had a better personal understanding of how the pieces fit together. My team sometimes need to explain to me complex problems like I am a Labrador and I find that knowledge gap frustrating.
If a law firm was a start-up pitching for investors, would you be an investor?
No chance; and this is why:
- The traditional model is dead, but people cling on to it hoping for something, anything to change.
- The competitive environment is intensifying.
- Margins will fall and we are unlikely to see an increase in market size of any significance.
- Tech will replace numerous functions.
- The regulatory environment is inconsistent and not business-friendly. It’s a shambles.
If you weren’t doing this, what would you be doing?
Investing in African start-ups; that’s a project for later this year. I love the continent; it is fizzing right now.
What would you like to be known for?
I rather like this:
When you do more than you learn – or earn – you leave a distinctive notable footprint on earth
Nothing to do with law, but more to do with creating a positive progressive culture with my team. I hope for the most part they gained something positive from the business and me.
What would surprise everyone if they knew – they may now.
What’s your favorite hobby or activity outside of law?
Writing blogs on law – kidding.
What’s your favorite sports team?
Derby County Football Club; for those that don’t know, read the Damned United. Brian Clough is an inspiration.
What’s your favorite city?
Too hard … London I guess, but Rio, Cape Town, Chicago, Bangkok, Buenos Aires all feature…
What’s your favorite food?
Thai, eaten on the streets of Bangkok for $2.
What’s your nickname – and why?
As a CEO & founder, David Holme provides the strategic direction and plays a key role in developing partnerships, identifying significant growth opportunities and managing key stakeholders for the company.