Fisher Phillips’ recent acquisition of a legal technology startup is an area where law firms are likely to build their own capabilities and spin off, or purchase third-party services on vendor platforms. It was an unusual move.
The Atlanta-based firm, which has about 500 lawyers, announced last week that it had acquired startup Blue Pencil Box. The company provides tools to help companies track changes in the regulation and enforcement of non-compete agreements. The company will become part of fpSolutions, a hub for technology tools that support compliance.
As part of the deal, Blue Pencil Box founder Jonathan Crook will become Fisher Phillips’ employee defection and trade secrets partner and will also oversee his company’s services within fpSolutions. he said.
Mr. Crook declined to discuss the terms of the deal.
need for speed
Across the industry, many law firms are considering how to build or integrate technology to meet client demands for more efficient operations. Biglaw is poised to be hit hard by disruption from artificial intelligence, according to a study released last week.
Building a technology department can also be costly for companies, said Lourdes Fuentes, founder of Karta Legal, a practice management and legal services consultancy.
While it’s less common for companies to choose to “buy rather than build” high-tech products, it’s likely to happen more often as companies seek to enhance their technology offerings. said Fuentes, who has worked as an attorney and in the electronic discovery field. Experts from leading law firms such as Duane Morris and Baker & Hostetler.
“Lawyers are figuring out that there are ways to help their clients by providing them with practical information and practical tools and resources that aren’t necessarily billed by the hour,” Crook said. Told. “I think we all recognize that there are many ways to provide exceptional customer service that don’t necessarily rely on billable hours.”
Legal technology onboarding
Dan Rinna, director of legal and technology initiatives at Northwestern Pritzker School of Law and McCormick School of Engineering, said law firms are using multiple models to implement legal technology.
When seeking to increase their legal tech presence, companies face “an important ‘make-or-buy’ decision,” he said.
One important consideration for companies looking to purchase legal tech is that many state laws require attorneys to own law firms. Linna said the lack of large enough states with relaxed rules that allow companies to acquire non-lawyer-owned technology companies means that companies like Fisher Phillips “This has become one of the obstacles” to acquiring companies, he said. .
While it has proven rare for law firms to directly acquire legal tech companies, many of the largest firms in the US and UK have strengthened their technology expertise through a variety of methods in recent years.
They hired software coders and other technical experts to design their own products. They have built “accelerators” and “incubators” that legal tech startups work exclusively with as they develop new products, such as Allen & Overy’s Fuse project. And just like Dentons did with his NextLaw program, they created their own venture capital business to invest in legal technology.
Law firm consultant Ralph Baxter also said he’s not aware of many examples of law firms acquiring legal tech companies directly. But he said this is a positive development insofar as it may reflect trends that are helping law firms evolve.
The evolution of law firms “will involve greater use of technology, and one way to do that is to buy technology that has already been developed,” he said.
A new situation without competition
Blue Pencil Box targets uncertain and changing situations in non-competitions. Federal agencies have cracked down on its use, and states have tightened laws related to the compact, creating a “patchwork of state laws,” Crook said.
Mr. Crook, the labor law expert, said there has been a significant increase in customer demand, but “generally it’s not restrictive covenants.”
“Customers want us to really focus on having the right restrictive covenants in the right places and using them in the right situations,” he said. “I think everyone has realized that the one-size-fits-all approach is over.”
Many companies will rely on trade secret litigation to enforce protection of their intellectual property in lieu of a non-compete. But “there is a lot of sensitive information that may or may not have trade secret protection under the law,” Crook said. “Having robust and appropriate confidentiality agreements in place like this is an important way to prevent unfair competition from the use of that type of information.”
He said companies are also looking to invention and intellectual property transfer agreements, which ensure that companies own valuable intellectual property created by employees while on the job.
Blue Pencil Box tracks five contract clauses that are often bundled together, Crook said. It is non-compete, non-solicitation of customers, non-solicitation of employees, non-disclosure and assignment of his IP.