Legadex Magazine 2018

magazine // 10 years of legal innovation

Jan Scholtes (extraordinary professor Maastricht University)

‘Intelligence allows us to work smarter, better, faster and more efficient!’

INSPIRATION AND INFORMATION | 2018 4/INTERVIEW WITH JAN SCHOLTES ‘We need people to draw conclusions’ 8/SEISMIC SHIFT IN THE LEGAL MARKET: Alternative is becoming mainstream 12/HANS ALBERS About the growing demand for a dedicated legal ope­r­ations role 28/DUTCH MASTERS Celebrating 10 years of Legadex 44/CYBER SECURITY AND DUE DILIGENCE Interview with Romano Herrie (Fox-IT) LEGADEX Magazine | 2018

CONTENT

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38

04

28 ARTICLES COLOPHON Legadex Magazine is published by

03 MIX In this issue and On my schedule 04 EXPERT Jan Scholtes and Nancy Brewster about

Legadex B.V. Legadex is your next generation legal service provider with head office in Amsterdam and branch offices in Rotterdam and Brussels.

the match between AI and M&A

08 TREND Alternative is becoming mainstream 12 LEGAL OPERATIONS Interview with Hans Albers

Cover Jan Scholtes

(Juniper Networks): efficient legal processes on a

Editors Legadex, JCM Context

human scale

Authors Michiel Rohlof, Luc van Daele, Annemarieke Noordhoff Translation Livewords Design and production Link Design Printed by WC Den Ouden Photography cover Geert Snoeijer Contact Legadex B.V. Teleportboulevard 110, 1043 EJ

18 24 28 34

Amsterdam, t. +31 (0)20 820 83 96 info@legadex.com

2

For further information on Legadex and our privacy statement, please see www.legadex.com In case you no longer wish to receice our free magazine or other information, please let us know at info@legadex.com

INTERVIEW Legadex: 10 years and counting TALENT Paralegal: backbone of the legal department EVENT Celebrating our first decade in style EVENT Multitalents enthusiastic about Paralegal day

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5 QUESTIONS FOR‌ Eric van Marle and Mark Volmerink (Marlink Executive Search)

40 TREND Legal as a service is BOOMING 44 EXPERT Romano Herrie (Fox IT): don’t forget cyber security

MIX

Dear reader, This year, Legadex is celebrating its 10th anniversary! We’re delighted to have reached this milestone. Over the years, our business has grown into an innovative legal services company with a fantastic team of colleagues and a great client base. Which is precisely what we intended when we began in 2008.

None of this happened by itself though. The legal market is highly conservative and isn’t known for being innovative, even though change is badly needed. Fortunately, we were able to benefit from two developments.

First, the realisation within the sector that a lot of legal work could be done better and faster using clear, often repetitive processes rather than on an ad hoc basis. Second, the emergence of many forms of legal tech and the opportunities and advantages that come with them. So it’s not surprising that we de­­­­­­­ci­ded on the slogan ‘People – Process – Software’ early on.

Informing and inspiring The legal market has now woken up to the need for change, and developments are really getting under way. We hope to continue bringing a fresh perspective to this essential legal innovation in the coming years.

On my schedule

This issue introduces you to a few more of the developments it has given rise to. This time we’re focusing on the benefits of Artificial Intelligence. We hope that the account we give will inspire as well as inform you. Because we want to inspire as many people as possible, we’ve opted for English rather than Dutch this time. If you have any questions or comments or just want to exchange ideas, we’re always happy to hear from you.

Luc van Daele and Hans-Martijn Roos (founders of Legadex)

What are you working on right now?

“I spend three days a week supporting the legal department of a financial institution, dealing mainly with compliance, due diligence, legislation governing financial supervision (AIFMD and MIFID II), and general legal issues. I also look at how the department might streamline its processes and where legal process software might be applied.

I spend the other two days working on contract automation at Legadex.”

who Morad Kada

is Professional Support Lawyer Corporate

What would you like to achieve in the near future?

“I’ve seen the legal landscape changing very rapidly due to trends in legal tech. In the near future, I’d like to focus on how innovative software

since April 2018

can deliver practical added value. I’m following opportunities for using

before that Professional Support Officer at NautaDutilh

Artificial intelligence (AI) in the area of M&A with particular interest.”

(Banking & Finance department) committed to “Putting forward efficient and innovative solutions for clients by highlighting and anticipating practical needs”

LEGADEX Magazine | 2018

3

EXPERT

AI and M&A:

A match made in heaven Artificial intelligence (AI) is ever more frequently being applied in mergers & acquisitions. Companies, law firms and private equity investors use robots because they work cheaper, more accurately and faster than humans. As Jan Scholtes (ZyLAB) and Nancy Brewster (Legadex) have discovered, buyers are increasingly imposing searchability of a data room as a hard requirement.

“The use of AI lets you retrieve a huge amount of information in a short period of time.”

Text Michiel Rohlof Photos Geert Snoeijer

4

Trainee lawyers fearing to get bogged down with a lot of

Jan Scholtes is professor Text Mining at the AI-group at

due diligence research in their first years at a firm can

Maastricht University and Chief Strategy Officer at

breathe a sigh of relief: the use of artificial intelligence (AI)

eDiscovery expert ZyLab. “Investors are saying: I want the

is now more or less commonplace and real manual work is

entire data room in PDF-format or the deal is off. That’s

becoming a thing of the past. Techniques used in data

when we use AI for fact-finding: retrieving the correct

science and AI are helpful tools in situations where there is a lot of unstructured information or where information

information, filtering out everything that’s irrelevant and

has to be collected from different sources and then

investors do is look for inefficiencies and improve a

correlated. What is more: in deals involving venture capital

company’s operations from within. If you want to be able

or private equity investors, searchability of the dataroom

to do so quickly and efficiently, AI is the way to go.”

missing as few relevant documents as possible. What

increasingly often qualifies as a hard requirement.

LEGADEX Magazine | 2018

>>

5

LEGADEX Magazine | 2018

EXPERT

Appealing proposition

conducted a study in which they

We made this happen by letting the

AI is not only an appealing proposi-

instructed top-class lawyers and

software search all available data and

tion because it offers speed, efficien-

computers to check contracts. This

subsequently making it draw

cy and cost savings, but computers

resulted in an accuracy rate of 94%

co­­n­­clusions in a report. That may

are also better when it comes to

for the computer and an average

sound obvious, but it’s revolutionary

accuracy. “Computers too may

accuracy rate of 85% for the lawyers

in its execution: you use your data

supply incorrect information at

sets to train the algorithms such that

times, but they are consistent when

– the best lawyers were 94% accurate and the worst scored an

they do that; this makes errors

accuracy rating of 67%. The com-

smarter over time. This makes the

easier to trace and correct.

We humans are inconsistent in our

puter got the job done in 26 seconds,

process a lot easier the next time.

while it took the lawyers an average

Without the application of AI, this

inconsistency, which is much more

of 92 minutes to finish. Those are

would be impossible or unaffordable.”

complicated. LawGeex recently

the hard and fast facts.”

they recognise patterns and become

Highly organised list

“AI offers speed, efficiency, cost savings 6

and accuracy: on average, lawyers score 85% on accuracy versus 94% for the computer”

Nancy Brewster is teamleader

Another recent example is the sale of

Transactions at Legadex. She de-

a loan portfolio by a financial

scribes a recent example of how AI

in­­stitution. Brewster: “When it comes

was successfully used in an M&A

to loans, a file must be complete. We

transaction. Commissioned by a

agreed in advance when we would

seller, artificial intelligence was used

consider a file to be complete. We

to make a retail chain’s real estate

then went on to conduct in-depth

portfolio more transparent and to

research using AI and the computer

increase its searchability to allow its

collated relevant information at file

sale. Brewster: “To that end, data

level, using email traffic and different

covering a long period had to be

document formats at different

collated from different sources. The

storage locations. This resulted in a

seller was adamant that the portfolio

highly organised list of incomplete

should be presented as a complete

files and the workfloor took action

and coordinated set of activities.

immediately.”

LEGADEX Magazine | 2018

“Computers can do a great job organising, filtering and arranging, but we need people to draw conclusions”

Scholtes states that modern AI is

Personal data

By properly defining beforehand

based on machine learning, in

Technology also helps companies be

what it is you want to know exactly,

which process computers learn to

compliant with the new European

you remain in control.”

recognise patterns in data sets and

privacy law: the General Data

print out relevant reports. This is

Protection Regulation (GDPR). “Large

Major advantage

easier to apply in practice than

quantities of data, including con-

Scholtes expects AI to evolve

traditional AI, which is more

tracts and email traffic, can be

significantly over the next few

rule-based. To illustrate: Watson, an

scanned automatically for personal

years. “We’re already seeing that

example of traditional AI, is difficult

data,” says Scholtes. “This allows you

companies and investors continue

to maintain without technical

to see right away what personal data

to use the technology even after a

knowledge. Modern AI, which is

is stored where. That information can

merger or acquisition: searchability

used by Netflix and Spotify – services that many people use on a

then be anonymised or pseud-

of company data is considered to be

onymised, if required.”

a major advantage and companies

daily basis – for instance, allows

effectively have a data room

computers to work with relatively

In short, AI will take over many

ready-to-go at any time. In the

small data sets. As a result, customers have easy access to AI. Scholtes:

standardised tasks, but human

context of the GDPR, insight into

verification will always be required.

data is also hugely important. Some

“Using modern AI, you simply share

Brewster: “Computers can do a great

private equity firms and companies

a lot of information with the

job organising, filtering and arrang-

are even using AI to measure the

computer, which then recognises

ing, but we need people to draw

productivity of their advisers. The

patterns automatically based on the

conclusions. In a due diligence review,

possibilities are endless.” <<

words in the documents. This

for example, you check which

makes things much easier for both

advisers require which information.

buyers and sellers in due diligence

Then you look at what the core

reviews. Potential problems are a lot

documents in a file are. All draft

easier to trace, possible deal

versions of a document may contain

breakers are recognised and no

incorrect information; with this in

more skeletons will come falling out

mind, you should only use signed

of the closet.”

copies for your research purposes.

LEGADEX Magazine | 2018

7

TREND

Seismic shift in the legal market:

Alternative is becoming mainstream The rise of alternative legal service providers is now an established fact. Whereas in 2008, innovation in the legal sector was rare, hourly rates for bulk and specialist work were often the same and the term ‘paralegal’ was virtually unknown in the Netherlands, the situation is now completely different, as international studies have confirmed.

Text Michiel Rohlof Photos Geert Snoeijer

8

A decade after Legadex was established, the legal market has fundamentally changed. Corporate legal departments are now structured in a much more processled way and different types of work are increasingly sourced from a range of service providers. This has woken up the legal sector and law firms have been trying for some time to diversify their own services and fee structures. But the biggest innovations are coming from newer players: alternative legal service providers, or ‘alternatives’ for short. These disruptive companies are now an established part of the legal landscape.

Growth potential A recent study by Thomson Reuters Legal Executive Institute/Georgetown Law Center for the Study of the Legal Profession and Oxford University shows for the first time how a group of relative newcomers have changed the face of the Anglo-Saxon legal market. The study, entitled ‘Alternative Legal Service Providers’, describes the trend as a seismic shift. 51% of the 554 law firms and 60% of the 271 corporate legal departments that were canvassed in the United Kingdom, United States, Canada and Australia said they now used

LEGADEX Magazine | 2018

alternative legal service providers.

Law firms use them for tasks such as e-discovery and litigation support, while corporate legal departments usually want help with implementing legislation and regulations and specialist legal work.

So the use of alternative legal service providers is growing, but still shows signs of a market in its infancy with, consequently, an enormous growth poten­­­tial.

Because developments in the US and UK legal markets often foreshadow what’s likely to happen in the Netherlands – since the bigger size of companies and law firms in these countries mean that many innovations can be rolled out faster there – it’s interesting to look at the status quo in the Netherlands. Here too, there has been a sharp rise in the use of alternative legal service providers; just think of suppliers of smart legal software or the way in which due diligence processes are now structured. Companies use paralegals working for alternative legal service providers as a flexible pair of legal hands, since they generally have a detailed knowledge of business processes and are good at understanding systems and work processes. There has also been a growing tendency in the last few years to outsource legal entity management and contract management in the form of managed services. Data analysis and artificial intelligence, for instance, are now used to support M&A and preparatory due diligence processes, making the work of company lawyers and attorneys much simpler.

Huge amounts Cost savings and cost efficiency are naturally also key drivers. This presumably partly explains why US and UK law firms and corporate legal departments have made the switch more quickly. Countries such as the US are spending huge amounts

on legal services: the combined annual fee income of law firms in the US is 275 billion dollars, compared with a total estimated annual fee income of 700 billion dollars for law firms worldwide. Innovations in the US legal sector therefore have a much greater savings potential, and the need to work more efficiently is often client-driven. The open market structure there also encourages a high level of commercial enterprise geared to smarter, better and more cost-effective developments.

That said, the cost aspect is only a small part of the explanation. In the Netherlands, it is quality that is the decisive factor: if it were only a question of hourly fees, every company lawyer or attorney would be going to a temporary staffing agency to book legal support. A higher level of specialisation often appears to be the deciding factor. Quality is the guiding principle, with the ‘horses for courses’ philosophy more important even than cost: what skills do I need to get specific processes running more efficiently? After all, a lawyer who charges a higher hourly rate may not always be better at a particular task; sometimes the opposite is true.

Compared with the rest of continental Europe, the Netherlands has a relatively fresh approach to the market: the use of alternative legal service providers appears to be more established here than it is in the countries around us. This may be partly due to the long-term presence of leading US and UK firms in the Nether­lands, and our high concentration of head offices of global multinationals, together with the open

51%

60%

of 554 law firms in the US, UK, Canada & Australia use Alternative Legal Services

of 271 corporate legal departments in the US, UK, Canada & Australia use Alternative Legal Services

$700

$275

Billion Dollars spend on legal services worldwide

Billion Dollars is the combined annual fee income of law firms in the US

Source: Thomson Reuters

market that has characterised our country since the 17th century. In Germany, by contrast, the legal services market is nearly entirely dominated by law firms, while in Belgium and France the pressure to innovate is also much less than it is in the US and UK. Compared with the 700 billion in combined annual fee income of law firms

“The biggest innovations are not coming from law firms, but from newer players” LEGADEX Magazine | 2018

worldwide, the US researchers put the market share of ALSPs at an estimated 8.4 billion dollars. This may not seem much, but given how much ALSPs have grown in recent years, it’s safe to predict that this market share will ex­perience further strong growth in the years ahead.

Limited use by law firms Another conclusion reached by the US study is that law firms make less use of alternative legal service providers than corporate legal departments. The same trend can be seen in the Netherlands,

9

>>

TREND

“The use of alternative legal service providers appears to be more established in the Netherlands than it is in the countries around us”

where companies have diversified their use of external legal service providers for much longer than law firms, which only appear to want to make limited use of them. One explanation could be that for many years law firms have tried to win market share by offering their own subsidiary and independent legal services, efforts that have never got off the ground. At the moment, law firms are mainly interested in using smart search functions to support litigation and fraud cases, and for due diligence processes.

10

So whereas in the US and UK the duties that law firms do and above all don’t focus on have more firmly crystallised, their Dutch counterparts are still feeling their way and the real seismic shift may not have taken place yet. However, this caution on the part of law firms now appears to be fundamentally changing. The arrival of a number of new firms from the US and UK is encouraging the further professionalisation of the

Dutch law sector. Larger law firms in particular realised long ago that they should only be concentrating on specialist services charged at high hourly rates and outsourcing the more basic tasks to innovative external service providers. Their clients are increasingly unwilling to give them bulk work or work with a high legal tech content, especially in view of the high fees they charge and their lack of experience with new working methods. The fear of losing a share of their income is still a major factor for such firms, but if they work with alternative service providers they will win more confidence from their clients. This is something they are increasingly realising.

Developments are moving fast As an alternative service provider in the Benelux market, Legadex is a prime example of just how much has changed over the past decade. In 2008, it began offering corporate housekeeping and contract management services from its offices in

LEGADEX Magazine | 2018

Amsterdam, at a time when much of the market was not yet ready for them. The company was told it wouldn’t succeed in rolling out these services on a large scale because corporates wanted to retain them in-house. Yet today, the Legadex corporate team handles legal entity management for multinationals in dozens of countries.

Corporates moreover increasingly want to fully outsource these activities in the form of managed services.

Developments relating to preparing transactions have also progressed quickly, largely due to the availability of artificial intelligence software. If you think how much time smart software can save – and how much easier this makes the work of young lawyers – it’s difficult to believe the traditional approach to due diligence has much of a future. Alternative service providers now play a crucial role in preparing corporate data and optimising due diligence reviews. Legadex has grown

from an ad hoc service provider in 2008 to a structural alternative service provider for corporate legal departments in many different areas today. The fact that the legal sector itself is increasingly calling on com­panies such as Legadex is an indication that the market for alternative legal service providers is increasingly coming of age, including in the Netherlands.

Smart AI applications Returning to the US study on alternative legal service providers, if for the sake of argument we assume that the Dutch legal market is likely to follow in the footsteps of the US and UK, what specific developments can we expect in the future? Continued growth in the use of alternative service providers for high-volume tasks, to start with. Until the use of external innovative service providers has become widespread in the legal sector, this growth will mainly be in high-volume activities (bulk contracts, due diligence reviews).

Other areas where further disruption is likely are solutions with a legal tech aspect, such as smart AI applications that can extract the maximum amount of information from a dataset and draw conclusions from it. Legadex recently used such applications to support the transfer of substantial mortgage portfolios in which data extending back 20 years was stored in a range of different systems. Algorithms were programmed to recognise specific patterns and gradually become smarter. The use of artificial intelligence immediately made the portfolios much more transparent and able to be presented cohesively, which was vital for a successful completion of the project. This is one of many examples in which an alternative legal service provider outperforms a traditional player.

Further segmentation Company lawyers and attorneys are faced with so many new developments, from legal tech to privacy and from skills shortages to

LEGADEX Magazine | 2018

class action suits, they simply canâ&#x20AC;&#x2122;t source all the expertise they need from a single external service provider. The Dutch legal sector will probably also see rapid further segmentation, in emulation of those in the US and UK. This will create huge opportunities for alternative legal service providers with technical knowledge and the ability to streamline services both for the corporate and legal sectors. It will be interesting to see how quickly this trend continues to gather momentum in the Netherlands and in other European countries. <<

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LEGAL OPERATIONS

An interview with Hans Albers, Head of worldwide legal operations, Juniper Networks

Efficient legal processes on a human scale Legal is an increasingly crucial success factor for companies. Not just due to its high-end input for major transactions or contracts, but also – or perhaps primarily because of – the day-to-day high volume legal work it handles. This leads to a growing demand for a dedicated legal operations role.

Text Annemarieke Noordhoff Photos Geert Snoeijer Legal operations has only recently become a familiar

Head of worldwide legal operations, reporting directly to

concept in continental Europe. Which isn’t surprising,

the firm’s General Counsel in Silicon Valley. Juniper

since expenditure on legal services is a lot higher in the

Networks makes network equipment and software for

US and UK. Legal procedures in the English-speaking

internet providers and the wholesale market. Its head

world are far more comprehensive and take longer, and

office is in California.

the US legal system – in relation to patents, for example

12

document discovery processes. So, pressure to boost the

Hans-Martijn: “What does your legal operations role involve?”

efficiency of legal processes is far greater in the English-

Hans: “Operating out of our office in California, my

speaking corporate world. But the concept of a dedicated

team and I use efficient legal processes and the right

legal operations role is also gaining ground in continental

automation tools to provide a full legal housekeeping

Europe. Hans-Martijn Roos (Legadex) asked Hans Albers

service to Juniper’s inhouse legal team worldwide. For

(Juniper Networks) to explain why. Albers is Juniper’s

example, we handle all their standard contracts, such as >>

– generates numerous claims and cases involving costly

LEGADEX Magazine | 2018

“Alternative legal service providers have a good understanding of company legal processes”

About Hans Albers • Director Legal at Cisco between 2000 and 2011, including more than two years in the US • Moved to Juniper Networks in 2011, becoming General Counsel EMEA

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• Member of the Board of the Association of Corporate Counsel (ACC) since 2015 • Head of Worldwide Legal Operations since 2016, reporting directly to the General Counsel in the US

LEGADEX Magazine | 2018

LEGAL OPERATIONS

distribution agreements and simple NDAs, arrange

“Don’t be too easily impressed by the latest shiny tool. Maintain your focus on the underlying processes”

pricing agreements and e-billing with law firms and organise their corporate housekeeping and legal entity management. We do this with a team of nine for around 85 people in Legal, including 38 in-house lawyers worldwide. But it’s obvious to me that a dedicated legal operations role will be relevant for any department with more than 40 or so people.”

Hans-Martijn: “It sounds as though your role covers a great deal.”

Hans: “Yes, it’s a very wide-ranging brief. I see it as a legal business management role to improve the full delivery of legal services throughout the company. In my case, that includes responsibility for recruiting, training and managing a diverse – primarily legal – staff, rationalising legal vendors and making cost-savings, introducing process management and evaluating the growing number of legal tech tools.”

Strategic planning

Global info governance / records management

Financial management

Outside counsel / vendor management

Knowledge management

Data analytics and metrics

Legal Operations Function

Technology support

Foundational Strategic coverage model

Communications Advanced

Cross-functional alignment

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Litigation support

Growth & development

Mature

Source: cloc.org

LEGADEX Magazine | 2018

Where does your organisation lie in the maturity scale?

The Association of Corporate Counsel distinguishes four phases in the maturity of corporate legal departments and their legal operations delivery:

1. Before legal ops High external spend, paper invoices, limited in-house team, working on spreadsheets.

2. Early stage Heavy external spend, 75% e-billing, law firms leveraged, designated legal ops head.

3. Advanced 100% e-billing, internal and external benchmarks and data, dedicated legal ops team, use of Alternative Legal Service Providers, contract and IP management.

4. Modern Analytics and scorecards, value-based fees, legal project management, in-house lawyers focused on high-value work, outside counsel on highcomplexity work, outsourcing of commodity legal work, automation, smart mix of in-house and external providers, centralised dashboard and analytics.

You can download the full ACC maturity model at: www.acc.com/maturity

Hans-Martijn: “How does the need for a legal operations role arise in companies? What’s the trigger?”

Hans: “It usually starts on the cost side, with CFOs

Hans-Martijn: “Is the rise of alternative legal service providers fuelling this growing interest in a dedicated legal operations role?”

increasingly pressured by shareholders to use limited

Hans: “Yes, this change in the supply-side is certainly also

resources more efficiently. This often prompts them to

a driver. Alternative legal service providers (ALSPs, ed.)

call in external consultants, including for Legal. These

understand company legal processes much better than

consultants then show the CFO and the GC external

traditional law firms: in fact, they’ve structured their

benchmarks and ask critical questions about their legal

business operations accordingly. ALSPs are thus a good

spend. For example asking questions like: is Legal buying

middle way between the two extremes of hiring an

in the right services? What is Legal costing the company

expensive law firm and outsourcing work to India. The

as a percentage of its overall turnover? And why are they

second option is often suggested by CFOs, since Finance is

hiring an expensive law firm without first negotiating the

used to outsourcing its own standard processes to India.

price? Or issuing a call for tenders? Are costly internal

But standard financial processes aren’t the same as legal

staff members tied up on basic tasks, which could be

ones, which involve dealing with different jurisdictions

outsourced more cost-effectively?”

and linguistic areas. In any case, Juniper’s standard legal transaction aren’t sizeable enough to justify outsourcing them to India. So the cost benefit of outsourcing is

>>

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“Use the data you’ve gathered to identify the bottlenecks in your organisation and to improve your processes” LEGADEX Magazine | 2018

LEGAL OPERATIONS

limited, whereas the added value of an in-house legal

“The rapid rise of legal tech is a fourth driver. The supply

operations team, supported by ALSPs, is very clear. A third

of this technology is growing so fast there’s a danger of

driver behind the rise of the legal operations role is that

legal departments losing sight of the wood for the trees.

Legal is having to take on more and more work. Recruiting

Lawyers don’t always understand IT, while IT depart-

extra staff isn’t the answer, since before long there’ll be

ments rarely possess legal knowledge. A legal operations

too much work for them as well. Automation and the

team can play a crucial bridging role between them.”

introduction of more efficient processes, on the other hand, is.”

Before Legal Ops Spend management

Legal services

• High external spend

Early stage

• Paper invoices

• Heavy external spend

• Limited control / visibility

• 75% ebilling / 25% paper

Advanced • 100% ebilling • Use of internal and external benchmarks and data

Technology

16

• Analytics and scorecards • Value based fees and legal project management

• Heavy use and right-sourcing to legal service providers

• Heavy reliance on outside counsel

• Dedicated in-house practice leads

• 60% outside / 40% inside mix

• Limited in-house team

• Law Firm leveraged for A-to-Z of matter

• Limited use of alterative legal service providers

• No legal ops head

• Lean outside law firm usage

• Legal bill review

• Assignment of work based on value / complexity

Legal operations

Modern

• In-house lawyers focused on high value work • Outside counsel focused on high complexity work

• Designated legal ops head

• Dedicated legal ops team

• Use of consultancies

• Defined processes and guidelines

• Spreadsheets

• ebilling

• Knowledge stored on individual work stations

• Document management

• Integrated matter management / ebilling

• Centralized dashboard and analytics

• Contract mgmt.

• Social and knowledge collaboration

• Supported by in-house lawyers

• IP management • ediscovery • KM

Source: Stages of Legal Operations Maturity (www.acc.com/legalops)

LEGADEX Magazine | 2018

• Extended global legal ops as managed service • Dedicated heads for spend, tech, ediscovery

• Mobile

Hans-Martijn: “What persuaded you to take on this new position?”

to wide. If, for example, you professionalise processes to

Hans: “At the time, I was General Counsel EMEA. It was a

legal assistance in the form of a ticket to a counter or

fulfilling role, but I nevertheless felt it was time for

service desk, then things have gone too far. Personally, I

something different. At that very moment, we got a new

believe you should be able to simply collar someone

General Counsel who wanted to do things more efficiently.

informally over the coffee dispenser. If, for example, a

Because I had a strong affinity with process thinking and

sales manager has to attend a complicated meeting the

automation, I put myself forward. The change management aspect also appealed to me, since for legals the

next day, he should be able to ask a company lawyer to

introduction of process thinking and efficiency represents

distance, there’s a risk that the business will no longer

a fundamental change. Take the drafting of RFPs or

recognise the added value and relevance of a dedicated

requests for fixed fees, for instance: this is a completely

legal operations role. It will then try to resolve things itself,

new way of working with lawyers, and will change

with all the associated risks. After all, the success of

companies’ relationships with law firms. These relationships will as a result become more businesslike, and

anything still depends on interaction between people.”

sometimes call for a tougher stance. Even after two years, for instance, how they can be sure they’re not paying too

Hans-Martijn: “What advice would you give to companies wanting to set up a dedicated legal operations organisation? What’s the best thing they can start with?”

much when they negotiate a fixed fee. Yet the same

Hans: “Start by gathering data, especially about your

applies – perhaps even more strongly – when you’re

external spend on lawyers and related professionals. Then

charged a retrospective hourly rate. A fixed fee at least

consider what else you know about your legal department.

gives you some predictability. Although of course it’s

How many law firms are you currently working with? And

always customised work.”

what’s your average spend on their services? How long

they’re still not used to it. Company lawyers often ask me,

the extent that the business has to submit its requests for

accompany him at the last minute. If you create too much

does it take them to process a contract? Only when you

Hans-Martijn: “You’ve been Head of Legal Operations for two years now. Have you managed to make any changes yet?”

know what you’ve got can you begin to make adjustments.

Hans: “Yes, mainly with regard to e-billing and the

we found that it spent at least two weeks lying on a

external auditing of our lawyers’ invoices. The initial

colleague’s desk in Finance. That might prompt us to think

quarterly reports are now showing a saving of approxi-

about skipping this stage of the process. It’s important to

mately 4% – with an external spend of several tens of

use the data you’ve gathered to identify the bottlenecks in

millions, that’s far from insignificant. I’ve also reduced the

your organisation. And to improve your processes on the

number of law firms we worked with from two hundred to

strength of it. This is known as Legal Process Improvement

one hundred. And recently, we issued our first RFP for an IP

(LPI). Make sure the savings on your external spend lead to

claim. Five law firms responded, with a difference of seven

rapid results, since this will substantially boost the added

million US dollars between the highest and lowest bid. And

value of legal operations in the eyes of the business. You

yes, I did go for the lowest, since they all satisfied the

can then reinvest the money you’ve saved in tools or

minimum requirements. So that saved us a lot of money.

automation. On the other hand, don’t be too easily

We’ve also made the lives of company lawyers easier by

impressed by the latest shiny tool. Maintain your focus on the underlying processes.” <<

removing some of their more repetitive tasks. All the

For example, we had a particular type of contract here that took several weeks to process. After a little detective work,

standard NDAs worldwide are now drafted by our team.

Around 70% of these are fully processed through our online self-service NDA tool, with no lawyer intervention.

More complex, non-standard NDAs are dealt with by one of my paralegals, or occasionally by the company lawyers.

That way, we retain the knowledge we acquire in-house.”

Hans-Martijn: “Besides all the benefits, are there any risks attached to setting up a dedicated legal operations organisation?”

Hans: “Very few. The only one I can think of at the moment

Want to learn more about Legal Operations?

Our white paper ‘Legal Ops - Where to start’ will be available soon. You can pre order it for free at info@legadex.com.

In addition an exclusive workshop on the subject is scheduled with Legal Ops pioneers Hans Albers (Juniper Networks) and Klaas Evelein (Unilever).

Please feel free to contact Hans-Martijn Roos for current dates and any additional information at hmroos@legadex.com or call him on +31208208396.

is if the gap between the business and legal would become

LEGADEX Magazine | 2018

17

INTERVIEW

18 This article was previously published in Dutch in the online magazine LegalBusinessWorld, www.legalbusinessworld.nl

LEGADEX Magazine | 2018

An interview with Frederike Sips, Hans-Martijn Roos and Luc van Daele of Legadex

Legadex: 10 years and counting Legal service provider Legadex is celebrating its 10-year anniversary 19

this year. That makes it a young company compared with the multinationals and law firms it serves, but in the world of alternative legal service providers itâ&#x20AC;&#x2122;s a veteran and pioneer.

LEGADEX Magazine | 2018

>>

INTERVIEW

“Growth symbolises the rise of alternative legal service providers”

Text Michiel Rohlof Photos Geert Snoeijer

and specialist work tended to be the same and the term ‘paralegal’ was virtually unknown in the Netherlands. So

Since the collapse of Lehman Brothers and the 2008

basically the only places general counsels could go were

banking crisis, there has been a real sea-change in the Dutch legal market: firms are now sourcing much more

law firms. That’s why we started thinking about corporate law departments from a clean slate, developing a

smartly, adopting the ‘horses for courses’ approach and

model setting out the main work processes and using

benefiting from innovations that follow each other at

that to design a department with the help of IT. Cost

breakneck speed. That’s why it’s high time to look back on

efficiency was obviously a major driver, but more

Legadex’s first 10 years with its founders Hans-Martijn

important still was the need to put the right people in the

Roos and Luc van Daele and their recently appointed

right roles, such as not using highly specialised lawyers

Managing Director Frederike Sips. “Companies that put

for corporate housekeeping.”

their legal households in order in 2008 are benefiting in the current economic upturn.”

In those days, the only places where you’d see this kind of diversification was in the US and UK, where paralegals

Concentrating on ‘process’

were by now an established concept. Van Daele:

When Legadex was established, the economic climate

“Nevertheless, law firms were also experimenting with

wasn’t particularly favourable; Roos and Van Daele

their own business models in response to a clear demand

launched their smarter working method in 2008, shortly

on the part of companies for cost savings in the wake of

after the collapse of Lehman Brothers and the outbreak of

the financial crisis. This resulted in some of the larger

the financial crisis, in a market that was chiefly concerned

law firms offering their own subsidiary legal services,

with its own survival and in many respects wasn’t ready

none of which got off the ground. This is no surprise,

for innovation. Roos had been working as a headhunter

given that lawyers by nature prefer to focus on specialist

and Van Daele was previously Head of Legal at Endemol.

tasks, which account for about 20% of the work. So we

Roos: “I’d built up considerable experience in spotting legal

decided to focus our sights on the remaining 80%.

talent and Luc was good at simplifying legal processes. So

Legadex’s model is to build as solid a legal foundation as

we based our new company on the principle of ‘people,

possible so that lawyers can work much more efficiently

process & software’: once you’ve got those sorted, you’ll

and effectively. Our first projects came from large

avoid a lot of grief. But many companies around us were

corporates who outsourced their corporate housekeeping

pursuing a reactive policy, and only investing in the reform

or contract management to us.”

of their legal structures when it was too late and they were

20

faced with acute compliance, bribery or contract issues.

M&A support

Although they talked about better staffing of legal

This was soon followed by requests to provide support for

departments, clerical duties were still being performed by

M&A transactions: virtual datarooms involving the use of

highly qualified lawyers. The right people weren’t there

data analysis and artificial intelligence made the lives of

yet: there were no legal operation officers or paralegals.

newly qualified lawyers much easier since they no longer

And the software they were using wasn’t innovative

had to spend weeks ‘camping out’ in a dataroom.

enough. So initially we concentrated mainly on the ‘process’ element, on making corporate legal processes

Legadex’s growth proved the precursor to a wider

more efficient on a structural basis.”

prevalence in the English-speaking world of alternative legal service providers: disruptive organisations that

Clean slate

have now become established players in the legal

Van Daele: “There was very little innovation in the legal

landscape. A recent study by Thomson Reuters Legal

sector when we began in 2008. Hourly rates for both bulk

Executive Institute/Georgetown Law Center for the

LEGADEX Magazine | 2018

Study of the Legal Profession and Oxford University analysed for the first time how these service providers have changed the face of the Anglo-Saxon legal market.

The use of alternative legal service providers is growing, but still shows signs of a market in its infancy with, consequently, an enormous growth potential.

Smart legal software Roos: “Law firms have been trying for ages to diversify

“The use of artificial intelligence by lawyers is growing rapidly, but for them it’s not a core business, while we’ve been using it for years”

their services and fee structures, but the biggest innovations in recent years have mainly come from outside the sector. You can project the developments that have taken place in the US and UK legal markets to the Netherlands,

pair of legal hands. Only later were they given specific

where the use of alternative legal service providers is

duties and did they evolve into the structural ‘lubricant’

becoming similarly widespread. Examples include the use

for corporate legal processes. Van Daele: “Paralegals as we

of smart legal software and the way in which due dili-

know them today simply didn’t exist in 2008. Initially, we

gence processes are now structured. And there’s the use

used experienced lawyers who wanted to take a step back

of paralegals, most of whom have a detailed knowledge of

from specialist work, or clerical staff and legal secretaries

business processes and are good at understanding

who wanted to move up the career ladder. Very soon,

systems and work processes.”

though, we began training the right people ourselves, and

21

paralegals have now become a clearly defined profesLegadex itself has contributed a lot to the development of

sional group in their own right. These days, they tend to

the paralegal profession, through its paralegal training

be law graduates who are happier in a legal environment

course and the launch of a Paralegal Day knowledge and

where there’s a strong practical element involving a high

network event. It initially offered these professionals – a

level of ICT and process management. Now that this

new concept for the Netherlands – mainly as a flexible

ambitious group is becoming more appreciated, I think

LEGADEX Magazine | 2018

>>

INTERVIEW

we’ll soon be seeing a dramatic rise in the number of

our added value for law firms is much clearer, not just in

paralegals. And in future they’ll start being called

preparing M&A or litigation processes, but also as

operational legal counsels or business counsels rather

suppliers of talent and smart software. The use of

than paralegals.”

artificial intelligence by lawyers is growing rapidly, but for them it’s not a core business, while we’ve been using it for

Full external outsourcing

years for contract and document intake, and for due

Another area in which Roos and Van Daele expect to see

diligence analyses. Smart AI applications can be pro-

significant growth is managed services: the full external

grammed, for example, to extract the maximum informa-

outsourcing of basic services such as legal entity manage-

tion from a dataset and draw conclusions from it.

ment and contract management. As Managing Director,

Algorithms can be programmed to recognise specific

Frederike Sips now has a team of 15 paralegals dedicated

patterns and gradually become smarter. A lot of prepara-

to this. Roos: “When we launched our external corporate

tion time is required to get everything fully programmed

legal service in the Netherlands in 2011, the market

into the systems, but once they are up and running, the

wasn’t ready for it. Only in the past two years has demand

margin for error is much lower than if the work was done

really picked up, partly because companies have got used

by people.”

to the remote service concept through their interaction with cloud services. Previously, paralegals or lawyers were

Automatic drafting of contracts

brought in on an ad hoc basis to check contracts and

And there are many more innovations in the offing.

company documents at specific intervals. Sips: “However,

Automatic drafting of contracts, for example, which isn’t

permanent supervision is needed to keep the supply of

yet widespread in the Netherlands, chiefly due to the

information up-to-date and to avoid backlogs and the

small scale of many companies and the limited availabil-

associated risks. Companies often have difficulty finding

ity of applications in Dutch. Nevertheless, developments

people to perform these tasks, but they can be done

in this area are progressing rapidly and it is quite possible

perfectly adequately and securely by an external service

that in ten years’ time the vast majority of legal contracts

provider. The essence of managed services is to offer

will be drafted automatically.

companies a full-scope solution: to give them the reassurance that their legal records are always up to the mark.”

Another unstoppable trend is blockchain technology. The current method of storing contracts and having them

New privacy laws

checked by national and international institutions would

Getting a company’s legal records up to the mark is also

benefit enormously from a different approach to interna-

an extremely good way of complying with the new privacy

tional agreements based on blockchain technology. Many

laws (the General Data Protection Regulation, GDPR). Sips:

companies and offices still store their contracts on paper

“Companies can no longer afford not to maintain a clear

in filing cabinets, but once a blockchain method has been

overview of their information flows. And it’s logical when

widely adopted, this form of storage will almost certainly

dealing with compliance-based issues such as corporate

become a thing of the past.

housekeeping and contract management to include

22

privacy aspects at the same time and make sure you

Eyes and ears

know what personal data is stored where. By working

Van Daele: “It’s difficult to believe that a mere ten years ago

together, legal, risk, compliance and the business can

there was barely any software for the legal sector; only

then analyse how well-structured a company really is.”

really for document management. We’re now seeing some

Looking ahead to the next ten years, Sips also expects to

incredibly smart innovations coming onto the market, often

see an increase in service provision to the legal profession

a combination of intelligent search engines, data analysis

itself. “Whereas before, we were seen as competitors, now

and artificial intelligence. Although we don’t develop

LEGADEX Magazine | 2018

software ourselves, we do work with software companies and in that respect we’re the eyes and ears of companies and law firms when it comes to notifying them of the latest developments. After all, if you’re not technically minded and you have to choose between the many service providers and programmes available, there’s a considerable risk that

“Legadex’s growth proved the precursor to a wider prevalence in the

you won’t select what’s right for you.”

English-speaking world of alternative

Roos: “The realisation that you can, or perhaps must, do

legal service providers”

things differently is only now really filtering through to corporate legal departments and law firms. Innovation is not an empty slogan: people really are embracing these new developments. You can draw an analogy with e-cars: only a couple of years ago, they were a real novelty, yet today Frederike, Luc and I all drive one quite happily. The same is true of the legal sector: operational excellence has arrived and is here to stay.”

Roos, Van Daele and Sips therefore believe that the next decade will be characterised by more strong growth and the further expansion of Legadex’s service package. Van Daele concludes: “We’ve grown from an ad hoc service provider in 2008 to a structural service provider in many different areas today. The fact that the legal sector itself is making greater use of our services is an indication that the market for alternative legal service providers is increasingly coming of age, including in the Netherlands.

There’s now a lot more choice in the legal market, and it’s the clients who benefit.” <<

23

LEGADEX Magazine | 2018

TALENT

The paralegal: Backbone of the legal department Recently, Legadex organised its third Paralegal Day, this time at the Rode Hoed cultural debate centre in Amsterdam. If there was one conclusion that could be drawn from the event, it was that the term ‘paralegal’ no longer adequately covers the associated range of duties; with this in mind, the new term ‘pluralegal’ was cautiously put forward as a replacement.

Text Michiel Rohlof Photos Elodie Burrillon

The new generation of paralegals consists of multi-talented individuals whose understanding of key corporate information, process-led working and strong affinity with IT constitutes the backbone of law firms and corporate legal departments.

In other words, the paralegal profession is clearly coming of age in the Netherlands.

“So much so, that the term ‘paralegal’ is really no longer adequate,” according to Luc van Daele (Legadex).

24

These days, many Dutch colleges of higher professional education now offer qualifications in law (HBO rechten). And in the past decade, more or less parallel to this development, Legadex has been taking specific steps to introduce the concept of paralegals to its clients. Before this, paralegals in the Netherlands were drawn

mainly from ambitious secretarial staff who wanted to move up the career ladder and experienced lawyers who wanted to take a step back. This has fundamentally changed in recent years. Paralegals are now increasingly becoming the backbone of legal departments, and their detailed knowledge of legal tech and process management tend to give them a head start on many lawyers.

Commoditisation The rise of legal tech is now rapidly changing the face of the legal sector. At the press of a button, clients will soon be able to call up advice for which they currently pay premium prices. This commoditisation will put growing pressure on the business model of traditionally trained lawyers. Corporate

LEGADEX Magazine | 2018

legal departments are increasingly looking for staff with IT and work process-related skills, disciplines that rarely (if ever) feature in the training of corporate lawyers and attorneys but are one of the core competences of a paralegal.

“Demand for paralegals is skyrocketing,” Van Daele confirms. “For some time now, general counsels have understood the value they add to their legal teams. Law firms have taken longer to come round, but they too are now making more and more use of paralegals. Over the past two years, nearly every major law firm has been to see us to ask how to integrate paralegals into their own organisation. The traditional view of paralegals as legal juniors who are saddled with the donkeywork is rapidly outdating.”

The professional training course for paralegals, which has been offered by Stichting Beroepsopleiding Paralegals and Legadex since 2010, clearly reflects the core competences of a paralegal in its curriculum. They include mastery of legal software, project management, personal effectiveness, legal business English, legal entity management, contracting and contract management, management of intellectual property and presentational skills.

Large dose of IT Over the next few years, paralegals will play a vital role in the transition to a smart, efficient legal service, chiefly through their knowledge of IT and legal tech, subjects that colleges of higher education are now

increasingly making part of their own curriculum. Van Daele describes the paralegal as a process-based lawyer with a sound basic legal knowledge coupled with a large dose of IT and strong organisational and analytical skills. He agrees that knowledge of IT is what makes the difference. “After all, many of the services Legadex is currently rolling out are based on the supply of legal information, such as the creation of virtual datarooms and due diligence for M&A transactions, and corporate housekeeping and contract management for corporate legal departments. All these activities frequently require the processing and analysis of large volumes of data.

Legadex increasingly uses artificial

intelligence to support these processes, and this presents the ‘new-style’ paralegal with an interesting challenge.”

New gold “Smart software and artificial intelligence can save you a lot of work, but you need someone with both a grounding in the law and technical knowledge to guide you through them. A role for which the paralegal is perfectly equipped,” says Van Daele. Legadex uses artificial intelligence, for example, in its Review Robot, which extracts useful information from extensive datasets. The results are checked by paralegals, who draw conclusions that companies and law firms can use to further improve their corporate housekeeping, >>

25

Julie Shannon, former Assistant General Counsel of AkzoNobel UK was keynote speaker at the Paralegal day.

LEGADEX Magazine | 2018

TALENT

“Paralegals with the right set of skills are the future.

They are much better equipped to respond to the legal reality that will evolve in the coming years”

contract management, M&A process or privacy policy. Van Daele: “Data is referred to as the new gold. This emphasises the growing appreciation of paralegals, whose tech-savviness will soon make them indispensable. The corporate lawyers we speak to already understand that a close-knit team of paralegals and legal specialists is far more effective than a team consisting of traditional lawyers alone.”

26

Changing legal reality A data-based approach is one of the core competences of a paralegal, and this will come into its own in the next few years as more and more companies and law firms – and judicial authorities – look at ways to

apply artificial intelligence. Van Daele: “People have really woken up to the importance of legal tech. It’s fascinating to see that it’s no longer the core professions of attorney or company lawyer that are now in the spotlight, but roles that were once regarded as ancillary, such as paralegals.

The same trend is visible in the medical sector, where over the next few years artificial intelligence will take over a lot of the work that is now performed by doctors and will increase demand for IT-savvy professionals with a basic grounding in medicine. Developments in the legal sector are now moving so fast that it’s no longer sensible to work based on a traditional market approach, since companies are now

LEGADEX Magazine | 2018

demanding solutions that conventional lawyers can’t always deliver. In that respect, paralegals are the future, in that they are much better equipped to respond to the legal reality that will evolve in the coming years. We at Legadex are keen to help shape that reality.” <<

EVENT

Dutch masters

Legadex celebrates its first decade in style Surrounded by Dutch masters from the Golden Age, a group of ‘young masters’, clients and business relations came together in Amsterdam’s Hermitage Museum this spring to celebrate Legadex’ 10th anniversary.

Photos Mirjam van der Linden Spring sunlight flooded into the gallery in the palace on the Amstel, highlighting and focusing attention on the group, just as the most famous Dutch master of all, Rembrandt, did in his paintings a few hundred years ago. “He was constantly innovating,” exhibition curator Birgit Boelens told the group, who listened with rapt attention. She was showing them masterpieces from the museum’s St Petersburg collection, briefly back in the

28

Netherlands for the first time in centuries.

A very special moment indeed!

LEGADEX Magazine | 2018

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LEGADEX Magazine | 2018

EVENT

Legadex 10-year anniversary at the Dutch Masters exposition at the Hermitage, Amsterdam

30

Birgit Boelens (Hermitage): “The most accomplished of these Dutch masters defied the rules of their age. They really knew how to touch people’s souls, packing absolutely everything into a single painting – emotions, a story, a specific theme, characters – the lot.”

LEGADEX Magazine | 2018

Hans Martijn Roos (Legadex): “Together with this room full of ‘young masters’, we’re preparing to step into a new world.”

31

Birgit Boelens (Hermitage): “Once upon a time, you’d come across Dutch masters all over the world. Thousands of paintings were sent to every continent.

We’re immensely proud that we’ve now been able to bring 63 of these exceptional works back to the Netherlands for a short time.”

LEGADEX Magazine | 2018

EVENT

Looking back over ten years of cooperation

32

â&#x20AC;&#x153;To me, Legadex means empathy, a willingness to listen and a truly customised service.â&#x20AC;?

LEGADEX Magazine | 2018

“Their innovative commercial approach gives the necessary depth to what we teach our law students at the college.”

“In a profession where most people are happy to chug along in the slow lane, it’s nice to see Legadex doing things differently.”

33

“It’s great to see how cleverly Legadex reorganises extensive administrative processes, people and resources.”

LEGADEX Magazine | 2018

EVENT

Multitalents enthusiastic about Paralegal Day

34

LEGADEX Magazine | 2018

About the third Paralegal Day The third edition of the Paralegal Day network and knowledge event was held at Theater de Rode Hoed.

It was again organised by Legadex in conjunction with its partners ZyLAB, HighQ, LegalBusinessWorld and Amsterdam University of Applied Sciences.

35

The purpose of the Paralegal Day is to further professionalise the legal sector, a process in which legal service provider Legadex is leading the way: as well as organising this event, it also runs a number of successful paralegal training courses. >> LEGADEX Magazine | 2018

EVENT

“The keynote speakers are inspiring and really get you thinking about what you want to achieve as a paralegal.”

Photo on the right: Julie Shannon was Assistant General Counsel at AkzoNobel UK. She began her career as a paralegal and is now a source of inspiration to others.

“A good paralegal has to master an enormous number of non-legal skills.

Take communication: many people are poor communicators, and that seriously undermines their efficiency.

So try to be as clear as possible in all your forms of communication.

To do that, you’ve also got to be a good listener, as well as being visible

36

in the organisation.”

LEGADEX Magazine | 2018

Characteristics of the paralegal of the future The paralegals and legal officers who attended the Paralegal Day were asked one important question: what did they think the paralegal of the future would look like? There was consensus about three characteristics:

1

A basic knowledge of the law.

2

An ability to monitor legal processes.

3

A detailed understanding of ICT and legal tech.

â&#x20AC;&#x153;Energy, innovation, discovery, connection: you can get so much out of a day like this!â&#x20AC;?

LEGADEX Magazine | 2018

37

5 QUESTIONS FOR

Eric van Marle and Mark Volmerink Directors, Marlink Executive Search

“Strong networks are created by sharing” Text Annemarieke Noordhoff Photos Marlink.nl

focus on sectors or professions because we believe it’s much more important to look at the people behind them.

After all, it would be a shame if an organisation in the

1. Can you briefly explain the service you offer?

financial sector missed out on a brilliant candidate match

“We build relationships between people representing

simply because he or she was in the ‘real estate’ batch.”

different sectors, professions and executive roles. What they all have in common is their attitude to life: highly

3. What’s new about your service?

ambitious, keen to inspire others and committed to carry

“Everyone in our industry focuses on people; there’s

on developing themselves. In this way, we create a

nothing new in that. But our approach is different.

cast-iron network. Because we focus on people and what

Unconventional, even. We do it because we really care

motivates them – and only afterwards on their sector or

about enriching relationships. Our primary goal is not to

profession – we get to know our clients very well. Then, if

fill vacancies as quickly as possible, but to make valuable

a company needs to recruit, we always find the right

connections. The executives, investors, entrepreneurs and

match. At all senior and executive levels.”

professionals in our network aren’t satisfied with just ‘average’. They set high standards – including for us. We’re

38

2. How does what you are doing strengthen the corporate (legal) sector?

therefore well-versed in coaching and call in business psychologists when we need to.”

“We sometimes jokingly refer to ourselves as the DNA matchmaker. We invest a huge amount of time and

4. What else can we expect from you in the future?

energy in getting to know our clients really well. So well,

“We’ll continue to look for new ways to enhance the

in fact, that we’ve sometimes identified their human

quality of relationships, even if doing so doesn’t always

capital needs before they have. We deliberately don’t

directly benefit us. For example, we organise small,

LEGADEX Magazine | 2018

personalised events where people in our network can

“Energy, innovation, discovery, connection: you can get so much out of a day like this!”

meet and talk following an opening address by a keynote speaker. ‘The currency of real networking is not greed, but generosity,’ as US author and CEO consultant Keith Ferrazi has written. We fully endorse that statement.

Bringing and sharing enriches people so much more than getting.”

5. What’s your relationship with Legadex?

“It goes back quite a few years now, and has recently been further strengthened. Luc (Van Daele, ed.) attended one of our events last year, and was introduced to Frederike (Sips-Brons, ed.), who was appointed Managing Director of Legadex this year. A very positive match – in terms of background and culture as well as on a personal level – for which we were able to pave the way.” <<

LEGADEX Magazine | 2018

39

TREND

‘Legal As A Service’ is

BOOMING

Text Michiel Rohlof Photos Geert Snoeijer

More and more companies are looking for a full-service concept for their corporate housekeeping and contract management. Such activities are generally outsourced in the form of ‘managed services’, the aim being to boost quality and efficiency and improve cost control.

‘change of control’ clause and therefore can’t legally be transferred to the new owner. The result is that customers wriggle out of their existing contracts and start renegotiating terms, and the buyer sues the seller for damages. Here’s another

These days, cloud solutions are so

A Service (SAAS) is becoming more

example: a company extends its lease

important in the software industry,

on a business premise for ten years

Legal As A Service, based on SAAS

just before being sold. When the sale

solutions, is also gaining ground in

is concluded, the extended lease

the legal services market. Legadex

contract is overlooked and not

therefore recently introduced the

disclosed to the buyer, who didn’t

Legadex Online concept.

want it. Result: another claim for

widely accepted that even the

40

compensation worth millions.

technical barrier to providing man-

Legal faux pas

aged services for corporate legal

It’s a mistake that commonly occurs:

The ‘403 declaration’, in which a

departments is no longer an issue,

company X sells a share of its

parent company assumes joint and

says Frederike Sips-Brons (Legadex).

business to company Y, and both

several liability for any debts arising

“It’s now becoming easier, for in-

parties assume this includes all the

from legal acts of its subsidiaries, is

stance, to keep critical operations

contracts it has concluded with

another prime example of the need

such as corporate legal housekeeping

suppliers and customers. Shortly after

for good information- and legal entity

and contract management perma-

the handover, however, it turns out

management. These declarations are

nently up to date.” Just as Software As

that some of these contracts have a

sometimes not cancelled when

LEGADEX Magazine | 2018

their affairs. Staff changes, manpower shortages and lack of the right skills set make it difficult to ensure a satisfactory level of service. So we’re asked to get things on an even keel again. Of course we’re delighted to temporary or flexible staff to work

help, but we’d far rather prevent a

at the client’s office. Legadex

legal housekeeping backlog from

already does a lot of this type of

arising in the first place.”

work for its clients. Once everything has been updated, the company

Barriers dissolved

itself often takes over again.

Since companies are increasingly

subsidiaries are sold, leaving the

Sometimes, however, this proves

outsourcing activities that aren’t part

original parent company liable. All

difficult, with new omissions and

of their core business, this is also

these may seem minor issues, but if

backlogs arising. We can then help

dissolving the barriers to outsourcing

companies don’t keep their legal

to turn things around.”

their legal administration. Changes in

housekeeping consistently and

the corporate ICT landscape and

transparently up to date, there is

“The request usually comes from

closer cooperation between compa-

a considerable risk of these faux

Legadex’ clients themselves: ‘You

nies and external service providers

pas occurring.

have all the know-how, work process-

through the use of collaboration tools

es and ICT systems, and you’ve

are fuelling this trend. “There’s now

Genuinely outsourced

already regularly helped us out. Why

much more confidence in cloud

However, in recent years a far

don’t you take it all over so that we

solutions,” Sips adds. “In fact, it’s less

simpler and more cost-effective

don’t have to worry about it any-

and less important where the work is

solution has become available: the

more?’” According to Sips, demand

done, provided it’s done well. Legal As

Managed Services concept, which

for this kind of full service concept is

A Service was already available ten

allows companies to more easily

growing fast. “Many companies have

years ago when Legadex was estab-

outsource their corporate housekeeping and contract management

difficulty finding the right people

lished, but the market wasn’t ready

internally to monitor and update

for it then. Systems are now much

>>

to a team of legal specialists. “I see it as a kind of Legal As A Service,” says Sips. “The basic legal administration that has to be kept up to date and in good order, such as the drafting and management of corporate documents, contract management, deposits in public registers, and so on, can now all be outsourced to external service providers. This has already been happening to some extent, usually by bringing in

“If companies don’t keep their legal housekeeping consistently and transparently up to date, there is a considerable risk of multiple faux pas occurring” LEGADEX Magazine | 2018

41

TREND

“Companies are now really starting to discover the concept of managed services, and its benefits are legion”

more advanced, the risks surround-

other stakeholders within the

out effectively calls for a robust

ing data security have been ad-

company, since the information they

shared technical infrastructure in

dressed, and companies are now

need isn’t fully accessible (online),

which we can work and to which the

flocking to it.”

up-to-date or accurate. This takes up

client has access. For legal entity

a lot of internal company time which

management and contract manage-

Large and small

isn’t always obvious to people. And

ment, we use Effacts (Wolters Kluwer,

Legadex already provides an arm’s

that includes the hidden costs of

ed.), which we can offer as part of our

length service to multinationals, stock

administrative backlogs. It’s also

service to the client. So clients no

funds and private equity investors.

crucial in the interests of risk

longer need to purchase, maintain or

For corporates, it’s often a way of

management for legal information to

pay for licenses to systems if they

ensuring continuity of service

be fully up to date. Think of corporate

don’t want to. We can supply the

provision. For smaller companies, this

acquisitions, mergers, refinancing or

entire package.”

kind of legal work often falls between

the supply of information to the

two stools, and a low-threshold legal

regulatory authorities.

service is a way for them to satisfy

42

The costs are also highly predictable, since Legadex offers a customised fee

fundamental requirements governing

Privacy law

structure, with a choice of an hourly

information supply and legal compliance. The main aim is to obtain a

The new EU privacy law, the General

rate, fixed monthly fee, fee per

Data Protection Regulation (GDPR), is

company or per contract. Sips:

‘worry-free’, all-inclusive service, but

another compelling reason for

“Managed Services currently employs

cost is obviously also a factor.

companies to have their legal

a dedicated team of ten lawyers, but I

information in order, since everyone

wouldn’t be surprised if we doubled

To begin with, it saves time, since for

will soon be required to have their

that within a year. Companies are

many companies, this type of work

information flows up to date. Failure

now really starting to discover the

involves constant repetition and

to do so could lead to huge fines. Sips:

concept of managed services, and its

duplication. What’s more, it’s often

“Clients often also ask us to rational-

benefits are legion. Legal As A Service

done by people who lack the requisite knowledge or interest, which

ise and update the rest of their

is about buying quality and conve-

administration and to check what’s

means it takes far longer than it

stored where using data analytics

nience and avoiding a lot of anxiety and aggravation.” <<

should. It also wastes the time of

and artificial intelligence. Rolling this

LEGADEX Magazine | 2018

EXPERT

44

LEGADEX Magazine | 2018

M&A: don’t forget cyber security You can’t open a newspaper these days without seeing some reference to cyber crime: foreign hackers interfering with election results, companies paralysed by ransomware and data on thousands of individuals stolen and sold on. So it’s especially baffling that the evaluation of cyber security still isn’t a standard element in due diligence processes, says Romano Herrie of Fox-IT, the well-known Dutch computer and network security company. “Cyber crime has become a major risk factor. Buyers therefore want to know how secure the company they’re about to acquire really is.”

Text Michiel Rohlof Photos Sicco van Grieken

In July 2017, Paypal, owner of the online payment system, acquired the Canadian payment services provider TIO Networks for 240 million dollars. Less than four months later, a huge data breach came to light in the new subsidiary, compromising information relating to some 1.6 million clients. In what was clearly a major setback, PayPal was forced to suspend TIO Networks’ operations.

Earlier in the year, Verizon, another tech giant, managed to get its acquisition of Yahoo reduced by 350 million dollars after Yahoo discovered it had sustained two major data leaks between signing and closing the deal. So the impact of cyber crime can be huge. Yet despite that, the topic is generally given very little attention in the due diligence phase. Romano Herrie, who’s been with Fox-IT

since September and was previously a banker working on M&A transactions, saw this for himself during the numerous M&A processes he supervised.

“There was little or no focus on cyber security in the due diligence phase, yet it’s a very real risk for all companies,” Herrie confirms. “Cyber crime has become a highly lucrative industry: companies are now confronted by hackers with an increasingly sophisticated arsenal at their disposal.”

Public pressure The General Data Protection Regulation (GDPR), which recently came into force, further underlines the need to secure personal data and prevent data breaches. >>

LEGADEX Magazine | 2018

45

EXPERT

“Public pressure to keep customer details safe is growing, and companies are being subjected to increased scrutiny. Cyber crime has become a major risk factor, so it’s only logical to include data security in the due diligence survey,” Herrie says. “Buyers want to know where they stand. Security vulnerabilities are not deal breakers per se, but mitigating them can be a considerable cost item for the acquiring party.”

46

Buyers are obviously anxious to know that new acquisitions are safe. “They need to ask themselves how vulnerable a potential acquisition might be,” he continues. “Where are the risks, what might hackers be especially keen to get their hands on, what vulnerabilities can be monetized? Some businesses might already have been targeted without even realising it. This is why buyers ask for insight into the company they are planning to acquire.

Obtaining this insight is also possible by searching for vulnerabilities from the outside. Finding leaked credentials, sensitive information or unsecured systems may be an indication of a high risk profile. For example, we have found unsecured databases with customer or personnel data. At one company we found a video conferencing system in the boardroom that was openly accessible from the outside. Critical findings may even be a reason to inform the company in question. Although an ‘open source’ investigation doesn’t necessitate the cooperation of the company being screened, a survey of this kind, which maps its digital footprint, can produce useful insights. It can, for instance, indicate its potential vulnerability to corporate espionage, the insecurity of the personal data it holds or its susceptibility to operational risks,

a factor that is often overlooked. A manufacturing company, for instance, may have production lines that are controlled by outdated, poorly secured software. This carries a high risk of a security incident, which could easily bring the entire production process to a standstill. An incident of this kind could result in enormous disruption, with potentially major financial losses.”

At least a year Herrie assists shareholders considering a sale, with a balanced suite of prevention detection and response solutions. “We help shareholders keep risk factors manageable. The right security measures will limit the risks between now and the moment of sale.

Besides, upon exit they will help you preempt any questions from bidders about cyber security and data protection. But of course, timing is of the essence. Structural improvements to your technology, processes, policies and awareness may easily take a year to implement. That means you should not start thinking about cyber security at the start of a divestment process; you would need to start taking adequate measures well before. Otherwise you have to resort to quick fixes. To prevent is always better than to cure – as well as generally being far more cost-effective.”

Then there’s the due diligence process itself, during which company data is shared with many different parties. “Sensitive information such as financial projections, business plans and inside information suddenly becomes visible to many different parties, each of which has advisers of its own. Much of this information is sent by email, and documents are rarely passwordprotected. Virtual datarooms also don’t always use a two-step

LEGADEX Magazine | 2018

authentication. So the acquisition process itself is fraught with risk,” Herrie warns.

Wake-up call Herrie focusses on both corporates and private equity investors, parties with a strong focus on identifying and mitigating risks.

Compared to tax, financial and legal risks, the risk of cyber incidents is certainly just as important. Think of a company with high-quality intellectual property. If that property is stolen, it could have a substantial negative impact on the investment rationale. Companies and their advisers are now also beginning to acknowledge the importance of cyber security. They’re already busy working on it in preparation for the GDPR, and for many the insight this has given them in their data has been a real wake-up call. In 2017 alone, more than 10,000 data leaks were reported to the Dutch Data Protection Authority, an increase of 70% on the previous year (5,849). “Cyber crime is too big an issue to ignore.

A properly implemented cyber due diligence pre-deal and well-­ placed security measures post-deal can prevent serious problems and could save a great deal of money,” Herrie concludes. <<

“Cyber crime has become a major risk factor, so it’s only logical to include data security in the due diligence survey”

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LEGADEX Magazine | 2018

LEGADEX ONLINE The legal services of today Legadex Online: the latest addition to our range of services Legadex Online offers legal and paralegal services remotely. This service is provided alongside our standard service, which allows ex­ perienced lawyers and paralegals to work on-site at your place of business. Legadex Online delivers quality, flexibility and speed at a

Corporate housekeeping required for group companies in multiple countries? Hundreds of contracts you need to keep track of?

Secure services and software allin-one

Not a problem for Legadex Online!

prefer, we offer our convenient

Our team of experienced paralegals and lawyers can take care of all your operational legal work, freeing

We can work in your systems by remote access or, if you ‘software as a service’ platform, based on effacts.

up your team’s time to attend to strategic business needs.

Powered by effacts

fixed monthly fee.

Legal entity management as a service • Provides insight into your group structure and access to your company documentation 24/7

• Offers peace of mind for fees starting at just 50 euros per company per month

• Ensures that information on management changes, powers of attorney and changes in shareholding structure is always up-todate

Want to know more about how Legadex Online can help you?

• Includes all required documents and resolutions, as well as registrations with the Chamber of Commerce

Please call Hans-Martijn Roos or Frederike Sips for an introductory meeting and a fee quote geared to your requirements: +31 (0)20 820 83 96 www.legadex.com