Some colleagues asked me that other day if I knew whether Axiom is a law firm. I said I didn’t really know, so I decided to find out. There has been much buzz lately about AxiomLaw . The company recently raised $28,000,000 in private equity funding, after an initial round of $5,000,000. Axiom has recently launched a new Web site call ReThinkLaw – a kind of forum Web site that is designed to "provoke thought and drive innovation in the business of law—leading to greater efficiency and positive change for the benefit of clients, firms and lawyers alike."
- A landing page on the Axiom Law Web site claims they do "legal work efficiently";
- Axiom calls the companies it works for its "clients", rather than customers.
- Axiom claims it is a "modern interpretation of a law firm" , implying that it is a law firm.
- Axiom compares itself to traditional law firm, and asserts that it is a law firm on diet.
AxiomLaw sounds like a law firm and has a domain name that makes it look like a law firm. When it describes itself it states that "it is not your father’s law firm" or it is "a new model legal services firm."
But its not a law firm at all. The company’s real name is Axiom Global, Inc., It is organized as a "C" corporation, and incorporated in the State of Delaware, just like any other company. (This explains of course how it can have investors).
So if AxiomLaw is not a law firm – what does it actually do? It targets the General Counsel’s office of large corporation’s and provides the following services:
- It’s a high priced placement firm assigning lawyers to work for in-house General Counsel;
- It’s an outsourcing firm working directly for General Counsel of major Fortune 500 corporations;
- It does "projects" directly for General Counsel of major Fortune 500 corporations.
Should any one care whether AxiomLaw is a law firm or not?
- Prospective attorney recruits might care whether they are being recruited by a law firm or something else;
- Prospective customers should understand that only a company with an in-house counsel who is a member of the bar where the legal matter is being conducted can qualify for AxiomLaw’s services;
- If you don’t have an in-house counsel, then you can’t use Axiom’s services. Not being a law firm. Axiom cannot provide services to the public (individuals or organizations) directly;
- Prospective corporate customers should understand that the traditional lawyer-client confidentiality privilege does not apply. Any confidentiality must result from the relationship between the company’s general counsel and their outsourced lawyer workers by virtue of the agreement between Axiom and the corporation customer – but I wonder if that is sufficient.
- Competing law firms might care that Axiom suggests that its services are "legal services" competitive with the services of other law firms, when in fact they are are just "services" by definition. Actually contracted support services by in-house counsel. Otherwise Axiom would be violating Unauthorized Practice of Law (UPL) regulations in every state. Since Axiom is not really a law firm it can make claims about its services, that are not subject to bar regulation. Some of the statements that Axiom makes about its services, a law firm is prohibited from making because it would be in violation of the advertising and disclosure rules which are operative in every state.
- Law firms are prohibited from solicitation. AxiomLaw is not subject to the same constraints.
- Maybe state bar association officials should be concerned that the location of the disclaimer on the AxiomLaw web site that states that Axiom is not a law firm and cannot give legal advice. It is difficult to find. . I finally found it here. and here.
Is AxiomLaw a positive development for the legal profession? Who knows?
General Counsel of major companies seem to think so. AxiomLaw is demonstrating that certain kinds of services can be delivered at a much lower price, without compromising quality. By enabling corporate counsel to get done certain kinds of legal work that ordinarily would be provided by outside counsel at a much higher price, Axiom has opened up a major market be simply segmenting the kind of work that can be done more efficiently in-house with help from Axiom.
It seems to me, however, that an in-house counsel assumes the risk of malpractice when they contract with Axiom. Axiom is not a law firm so it can’t secure a law firm malpractice insurance policy. Moreover, the supervisor of the legal work is not Axiom, (technically it can’t be), but in-house counsel. When in-house counsel contracts with a company like Axiom they give up the assurance of quality legal services and accountability that they get from a traditional law firm.
In checking directly with Axiom on this point, Axiom states that:
"The individual lawyers don’t carry their own malpractice, Axiom maintains a lawyer’s professional liability insurance policy that provides coverage for all Axiom attorneys, regardless of W-2 or independent contractor status. Almost all of our lawyers in the US are W-2 employees. Axiom does not, because we cannot, have access to or supervise the substantive work of our lawyers."
One likely impact of these developments is to destabilize the business model of the Big Law firms by sucking out the more routine work from big law firms which results in decreasing overall profitability. As the Axiom’s of the world expand their services and their reach, there will be less work for the large law firms resulting in a shrinkage of the market share of traditional law firms. (real law firms!). The firms that are left standing will offer the most high-end legal services but will probably raise their fees as they will be the only game in town as a supplier of complex legal services where law firm accountability is a necessity.
Do GC’s have any interest in a vibrant independent and expanding legal profession, or do they prefer a world where there will be less traditional law firms offering their services at higher fees?
Two final questions for consideration:
1. Should AxiomLaw be more transparent on its Web site about what kind of an organization it really is by making clear that it is not a law firm, and should it avoid comparisons with traditional law firms?
2. Maybe non-law firms like Axiom, with their access to capital and superior management and technological resources, should be able to offer legal services like a real law firm, but just make these new organization’s subject to the Rules of Professional Conduct like any other law firm.
Of course, private investment in a law firm is prohibited by Model Rule 5.4, but maybe it’s time that state bar associations recognize that there is a new kind of organization moving into the legal industry any way, so why not simply subject these new players to the same regulatory scheme as traditional law firms?
Would that level the playing field? Would that provide better consumer protection for both individual consumers and corporate purchasers of legal services?