A fintech business will use AI to help it choose which law firms to instruct, scrapping its usual panel process.
Tom Hambrett, Chief Legal Officer at Revolut (previously a corporate solicitor at Herbert Smith Freehills) stated in a LinkedIn post, that “the traditional law firm panel” had become the “default because everyone was doing it”, but it was no longer fit for their business.
The CLO said they’d replace the “static panel” process with “Revolut Partners” which he/an AI chatbot described as “a dynamic, performance-based ecosystem assessed against metrics that actually matter & competitive best in class rates, and of course how they engage with our products”.
Describing Revolut’s AI tools in development, Hambrett said it would: “help lawyers run RFPs*, pre-select firms for specific instructions and scrutinise advice & invoices”.
The fintech company will also ditch long-term panel arrangements. “Firms will be reviewed quarterly – and we’ll make changes when the model tells us to,” said Hambrett, describing “underperformance” as “poor client management, unmanaged scope creep, weak billing practices, a lack of responsiveness, or direct feedback from our lawyers that advice quality isn’t where it needs to be”.
Hambrett added that while “relationships still matter…the firms that make our shortlist will be the ones that consistently deliver the right outcomes, at the right pace, with the right commercial discipline”.
Hambrett also crowbarred in sporting analogies, as if he was giving his lawyers a pep talk/hairdryer treatment: “We’re building a pool of firms ready to step up the moment a first-choice partner falls short”; “Firms can no longer solely rely on soft relationship touch points to keep their place in the squad”; “No one partner’s position in the starting lineup is guaranteed”; “That bench is real”, and “Performance wins you minutes on the pitch.” All of which should serve to motivate/terrify Revolut’s lawyers.
His post was lapped up by some followers on LinkedIn.
Leanne Murray, a real estate lawyer at Priestleys, agreed that while relationships are still important, businesses “need to ensure” that “KPI’s are being met.”
“No room for complacency! Golden goose panel systems that a business is stuck in for years is changing,” Murray added. “Your panel firms should always behave and perform in a way that is an extension of your business.”
Bart Lieben, an IP lawyer also concurred with Hambrett: “Transparency on metrics should be the default, not something the client has to ask for.”
However, others raised points of concern. One lawyer, Richard Oliphant, commented: “I don’t agree with the notion that Revolut is best served by playing off panel firms against each another.”
Oliphant opined: “The real value of external advisers lies in their more nuanced understanding of a client’s business. And that is only attainable through close and enduring collaboration…The approach you are advocating will have the opposite effect – firms won’t trust you or see any hope of a durable collaboration if their status on your panel is as fragile as a Middle East peace accord”.
While another lawyer said: “Adverse selection could be an issue. The firms with genuine market leverage will simply opt out. They have less demanding clients and simply might not need this. What remains is a competitive race among firms that couldn’t afford not to participate (on a desperate part of the market for some reason), which is the opposite of what this model seems to focus on.”
The lawyer added she would be interested to see how Revolut handles “overexposure with the rotations and underexposure for those on the bench required to quickly step in once activated.”
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