The Legal Forecast: Andrew Mellett

As CEO of Plexus, 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 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’Oréal, 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 in the AFR, Sydney Morning Herald, ALB, Lawyers Weekly and The Age.

Our remarkable Victorian President, Sophie Tversky, was fortunate to pick Andrew’s brain recently.

Why did you decide to found Plexus?

My co-founder and I 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 believed there had to be a better way.

Plexus’ vision and mission is to “Create the Future of The Law” and your mission is to: “Transform the value of Legal’ for the benefit of our clients, our people, and the community.” What does this mean to you?

If you think about it, the law is the best mechanism we’ve found to guide society. It provides certainty, access to justice, and is the connective tissue of value creation. It’s also 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.

What does being a lawyer mean in the 21st century?

‘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 built into our model”). Through a confluence of technological change, and deregulation, that information asymmetry is rapidly dissolving. 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 too.

We see three major outcomes from this trend; some positive for lawyers and some negative:

1. Many lawyers won’t choose (or be able) to evolve their skill sets rapidly enough to generate value in this new paradigm. This, when coupled with an oversupply of legal grads, will result in compression of salaries at the bottom end of the market.
2. On the flip side, a huge amount of the boring routine work that used to drive dissatisfaction with legal careers, will be automated. Replacing many of these roles will be an enormous range of interesting new career paths. Each year in our business we create roles that previously didn’t exist in the Legal industry. Examples include: Legal Consultant, Legal Knowledge Engineer, Customer Success Manager, project manager, along with a range of commercial roles that lawyers can be uniquely qualified for. This will be an enormous net gain for those that remain in the industry.
3. The legal professionals who will win are those who position themselves to benefit from the ‘tailwinds’ of this transformation. There will likely be a shortage of talent for the roles listed above, which will mean those who have the skills will benefit from the positive growth cycles of the transformation. Equally, although there will be fewer, there will still be some extraordinarily well paid ‘traditional lawyers’, however these lawyers are less likely to create value through ‘documentation’ and more likely to be rewarded for what we call ‘path finding’ – using their deep understanding of domains to solve complex problems for clients.

You conducted research last year that revealed over 3/4 of clients did not believe they got value for money from their legal service providers. How can this be improved?

If you look at it, what every customer wants is a solution to their problem that is ‘faster, better, and cheaper’. To the frustration of their clients, law firms have traditionally suggested that they can only have one of those three. Their ‘hourly rate’ charging model has incentivized behavior that over-indexes on quality to the utmost detriment of speed and cost, when in fact speed has the greatest correlation with customer satisfaction. The result? An industry average Net Promoter Score of 16%.

On the contrary, Jeff Besos has built one of the largest enterprises in the world with a simple strategy: Faster, Better, Cheaper – and has dominated industries through successfully combining all three.

The answer to your question is two fold:

1. As Charlie Munger says ‘show me an incentive and I will show you a behaviour’. Law firms need to shift their incentives to align with client outcomes. We have proved at Plexus that using value based pricing and measuring NPS on each matter transforms how you think about client success (as a result our NPS is five times higher than the industry).
2. Ultimately, we believe that we are at the start of a wave of what Schumpeter called ‘creative destruction’. As clients recognize that there are better alternatives we will see growth in those organisations that are truly client centric, at the cost of intransigent incumbents.

Legal roles and titles are changing in this fast-moving legal landscape: what do you think are some of the new roles that will be created in the next 5-10 years?

The application of technology is going to drive a lot of this, hence there will be a huge amount of hybrid computer science/legal roles, and many more business/legal roles. Some we are seeing are:

• Legal Consultant
• Legal Business Analyst
• Legal Project Manager
• Legal QA
• Legal Knowledge Engineer
• Along with Lawyers going into Sales, Marketing, Management etc.

Where do you see Plexus evolving as a business?

We have been at the vanguard of many of the largest transitions the industry has seen over the last seven years, and we hope to remain at the forefront in creating ‘The Future of The Law’.

We are investing aggressively in four spaces:

1. Thought our Legal Gateway business we are building technology enablers for lawyers and Legal Automation for business people. We have proven we can ‘put your best lawyer, on their best day, on every desktop in the enterprise, 24 hours a day’.
2. Through our wildly successful Promotion Wizard We are building out a range of products that we call ‘Legal Service as a Software’ that, although are legal services, technology does 90% of the heavy lifting, leaving our lawyers to serve their clients.
3. Through Plexus Engage we are continuing our push to provide a more flexible career options for lawyers, while providing more dynamic solutions for clients to bridge the capability and capacity gaps in their businesses., thus reducing unnecessary outsourcing.
4. Finally, in line with our ‘Everybody Wins’ business philosophy we have recently kicked off an initiative called Plexus Impact to take our technology and expertise and build free solutions that assist less privileged people in the community to address their legal needs. We hope, in time, that this social initiative will eclipse the impact Plexus has had on the legal industry.

What do you see as critical skills for new law graduates?

For a long time it was believed that success in the legal industry required zero technical expertise, though The Law as a monoline skillset is in the process of being disrupted. Those who will succeed in the legal industry of the future will have lateral skill sets that they can apply to create value in unique ways. I would advise law grads to combine law with business, engineering or computer science, and develop soft skills that cannot be replicated by technology.

How do you think the role of General Counsel will change?

General Counsels are different to their executive peers, as for the most parts that are lateral hires out of law firms. While the CFO or Head of Marketing may have ‘moved in house’ from a consulting provider in their 20s, the GC often get’s parachuted in from a law firm after they make partner. The challenge of course is that the skills that are required to be a successful partner are incredibly different to those required to be an executive in a large enterprise. Given this blind spot, many try to assemble an ‘inhouse law firm’ – ultimately failing the business.

Leading GCs in the future will borrow from the successful playbook used in other functions (Finance, HR, IT etc). They will attempt to centralise, standardise and automate routine legal work into Legal Operations Hubs (much like financial shared service centers), and compress the cost and time of these activities. They will then reallocate those resources to establish ‘Legal Business Partners’ who we call ‘pathfinders’. They will be tasked with navigating complexity to generate competitive advantage for the organization. This will then free the GC up to transition from ‘The Company Lawyer’ to a strategically important executive.