Nowhere to run, nowhere to hide

Machine-learning software from Irish company Brightflag can now read between the lines of every legal invoice.

Brightflag founder Alex Kelly is uniquely poised to understand the shifting balance of power between law firms and the large corporates’ general counsel who buy their services.

He has seen, first-hand, the rising power of the legal operations’ role in controlling and directing the legal budgets of large corporations.

Brightflag’s founding principle is using technology to drive collaboration in the legal ecosystem between large corporations and law firms.

It does this by using machine learning to rigorously interrogate legal billing. The company is on track to achieve €100 million in annual sales by 2025.

Narrative data

Kelly says that Brightflag’s cloud-hosted software is driving efficiencies by giving both law firms and corporate legal departments greater visibility around costs and budget, as well as offering real-time status updates on in-train legal matters.

The software can read and understand all of the invoicing data that law firms submit to their corporate clients. It turns invoices into ‘narrative data’, which visualises for the user just how much is being spent on each strand of legal activity.

The software will review all invoices, in line with corporate client-billing protocols, before they are approved for payment – removing the need for manual reading.

The algorithm automatically classifies how much time is being spent on the underlying legal tasks and activities, and the expertise level at which any legal matter is being resourced. It will also identify the optimal resourcing mix for any legal spend.

Legal resourcing on steroids

Kelly says that Brightflag’s particular innovation is that it enables the buyers of legal services to drive efficiencies and control costs. “Particularly in the US, this role of legal operations is driving a more objective and data-driven approach to legal resourcing,” he says. Even relatively small one-billion-dollar corporates will have a legal-operations professional in place.

Kelly says the rise of the legal operations manager is central to the success of Brightflag. This person is generally a non-lawyer who is responsible for all of the systems and processes that a legal department uses to support the business in providing legal services more efficiently. “Fundamentally, their job is to drive transformation in the legal department of a large organisation. They implement new technologies and are responsible for the financial performance of the legal department.”

The legal operations person will generally report to the general counsel, who will have a mandate to control costs. The legal operations person will execute the general counsel’s cost-reduction strategy, and will often come from a management consultancy or financial background. “They see themselves as the change agent for driving better business outcomes,” Kelly explains. 

Industry body

Legal operations executives have now founded their own industry body, called CLOC – the Corporate Legal Operatives’ Consortium.

There were 250 people at the first CLOC conference in early 2017, and it was largely attended by legal ops staff from corporations with revenues in excess of $10 billion. The most recent 2018 conference in Las Vegas in 2018, by contrast, had 2,500 legal ops executives in attendance.

Brightflag sponsored and spoke at that first-ever CLOC conference, in San Francisco. This was a pivotal moment for the growing business, and a huge gamble. It paid off. Many of the firm’s current clients were at that conference.

Kelly has also observed the trend away from hourly billing for legal services and towards fixed-fee pricing. He is convinced that law firms will no longer be able to tuck costs, such as training and overheads, into hourly billables.

Entrepreneurial pedigree

At 29, the Dublin man made the leap from big firm Matheson to the new world of digital entrepreneurship, a move he admits was “scary”, though also the most invigorating and exciting thing he has ever done.

His salary immediately dipped to a fraction of what he earned at the law firm.

The UCD law (2006) and Trinity LLM (2007) graduate has an entrepreneurial pedigree. His late mother Hilary’s people were in manufacturing in Oughterard, Co Galway, where his grandmother co-founded the bespoke fine carpeting design company V’Soske Joyce, which was a major employer and exporter in the area.

Alex’s father Pat is also a solicitor, with McKeever Rowan in Dublin’s IFSC. He credits his stepmother Catherine Duffy (a partner in A&L Goodbody) with prompting him to think about a possible future as an
entrepreneur.

He gratefully acknowledges how helpful his Matheson network was to him as he and co-founder Ian Nolan expanded their business. People do business with people, and knowing the right ones will always count for something.

Steep learning curve

He described the move to set up his software business as “a shock, and a steep learning curve in terms of non-legal specific areas.

“I don’t think I knew how difficult it was going to be,” he admits, as he plunged into the demands of marketing, sales, HR, and building a company from scratch. The firm now has 70 employees in its Dublin office and ten in New York.

His co-founder Ian Nolan has a background in legal technology, and they share a passion in modernising legal operations for large organisations.

“The most important thing for any young company is the relationship between the founders and, while Ian and I come from extremely different backgrounds in terms of skillsets, we share the same values and we’re extremely well-aligned in how we think about things,” says Kelly.

Alex remains convinced that artificial intelligence won’t do away with lawyers’ jobs, but will elevate the value of the work they do.