Law firms are creating new products and services at a faster rate than ever before, bringing new dimensions to client relationships. Lawyers are often key advisors when startups create and design their first equity plans, and with offices on four continents Taylor Wessing knows how startups in Europe and beyond scale efficiently.
In 2021, Taylor Wessing took the step of hiring Gerard Frith as Entrepreneur in Residence and Innovation Director. Prior to moving into the legal sector, Gerard was a serial entrepreneur with experience of three exits. We spoke to Gerard to better understand how innovation is transforming law firms and their clients.
Law firms and innovation
LEDGY: Hi Gerard! To get us started, why are law firms now thinking differently about innovation? And does an increased focus on tech mean that algorithms will replace lawyers altogether, or enhance the work they do?
GERARD: Good question! Firstly, there is a lot of work that happens in law firms which is expensive for clients but which can easily be sped up or made easier with digital products and services. This might be working with large datasets, or even down to proofreading contracts.
The most important parts of legal work are based on trust and strong relationships, which are the most challenging pieces of a lawyer’s role to replicate with technology. The aim of innovation programs in a law firm is absolutely to optimize processes, not automate lawyers out of their jobs.
LEDGY: Innovation roles are still quite new in the sector. So at Taylor Wessing right now, what kinds of product are you designing?
GERARD: There are several interesting projects we’re working on right now. Firstly, like many other businesses the team is exploring the implications of ChatGPT and how to leverage it to find advantages for clients. Then, closer to the traditional legal work, we’re exploring how to leverage ‘search and act’ tech and processes to be much more proactive for clients. Search and act models will let us go out and find examples of IP infringements, rather than waiting for them to be brought to our attention.
Building relationships with early-stage companies
LEDGY: So tell us about Taylor Wessing’s startup relationships. Early-stage technology companies are a primary focus for Taylor Wessing. Why do you spend so much time developing those relationships with founders?
GERARD: We love building relationships with startups and scaleups due to the pace of change taking place in these businesses. Working with new and disruptive business models is also a big highlight from the perspective of a tech-focused law firm.
Especially early on, startups are time-poor and cash-light, which isn’t exactly the model of a perfect client! But we know that these companies evolve very quickly over time, and there is a big advantage being the strategic partner helping founders set up new processes and kickstart important projects like employee share options.
Where law firms add value
LEDGY: So where would you say law firms add the most value to startups and scaleups?
GERARD: There are a classic suite of services that law firms can provide, like company incorporation, managing privacy and GDPR policies, and looking at intellectual property and patents.
But one of the biggest areas we add value for our startup clients is fundraising. Founders need to move quickly in a fundraising process and this is where the pressure is really on. It’s essential to have cool heads and experienced partners on your side during negotiations with investors.
LEDGY: In this climate where fundraising is not at the levels we saw in 2021 and 2022, how is a more cautious macro environment affecting the businesses you work with?
GERARD: Although investors are meant to be the key partners for startup founders, we’re seeing more examples of investors leveraging the pressure on companies to extract terms from the founder that are not necessarily favourable to the company and to employees. Those circumstances are where a law firm can use its experience to push back and make sure a deal is fair for all parties.
Where next for legal innovation?
LEDGY: And finally, looking a few years ahead, what will law firms be able to do for a founder and an early-stage company that they can't do now?
GERARD: I think that we’ll see law firms offering really competitive price points for key legal services, as automation enhances the work of lawyers. This will be a big win for our clients and also help lawyers focus on the strategic and relationship-led work that’s impossible to replicate with a machine.
LEDGY: Thank you for your time and your insights Gerard!
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