The Chief Incubators Q&A session at Lexpo ‘18
Ari Kaplan
Welcome back so we have a very exciting panel discussion that is going to take place now with fantastic souvenirs from some of our panellists and this is going to be really interesting. A Chief Incubators Q&A and we will be joined, so this is the way it will work; each of the incubator participants will tell you about their incubator for a few minutes and we will walk through it and then we will have a Panel discussion. So our first incubator participant is Ben Kingsley who is a partner at Slaughter & May in London. He serves at the Co-head of the firm’s Fintech practice advising established financial services, technology, media and telecommunications companies as well as Fintech start-ups. He also leads the firm’s Fintech Fast Forward Incubation programme. He will be followed by Shruti Ajitsaria who is Counsel with Allen and Overy in London and Head of Fuse, the firm’s tech innovation space. Shruti was simultaneously a credit derivatives lawyer and an angel investor on weekends having participated in Google’s start-up school while on maternity leave and Nicholas Kirby is a Managing Associate in the real estate department at Mishcon de Reya in London, where he specialises in commercial real estate sales and acquisitions for institutional and private clients. He splits his time between representing clients and running the real estate category for MDR Lab which is the firm’s programme for tech start-ups in the legal space focussing on the business of law, transactions, real estate, litigation and cyber and we will start with Ben. Welcome.
Ben Kingsley
Slaughter and May
Thank you Ari. Can everybody hear? Yeah. Good, good. So as Ari said, I am one of the partners at Slaughter & May and my day job if you like is practising as a financial services and Fintech lawyer but one of the more exciting other elements to my working week is as one of the coordinators of our Fast Forward Incubation programme and so I am just going to take a few minutes up front to talk about what sort of what we have done and why we did it part and I think we’ll probably come on in the Q&A to talk a bit more about how we make it work because it is obviously quite important running a business. What we did, well it’s a, it’s an incubation programme for entrepreneurs of all strains of Fintech and we called it Fintech Fast Forward because at the time we launched which was back in 2016 that felt like the right sort of term to use to explain to the outside world the sorts of businesses that we were really keen to support but Fintech I think has morphed in as a concept, we certainly found that what we originally regarded as Fintech type business has sort of bled out into all sorts of other sectors so our programme is actually a very broad one, there are no sort of strict entry criteria. We’ve got redtech, we’ve got paymentstech, we’ve got legaltech, insuretech, cyber, data analytics so it is sort of anything that’s vaguely financial and vaguely financial technology in our view is eligible to participate. It is very much a partner led programme within the firm. We’ve got a team of 14 partners and around about 40 or so associates who are sort of the core team servicing the companies in our programme and we so far have two cohorts going through the programme, some are still in it, we’ve had four graduate to date so it’s a, it’s a sort of moving feast in terms of what’s going on in the programme at any time. It’s not a structured programme in the sense that some of the accelerators you are find are you know, have a sort of six weeks intensive programme and you come out the other end and you go on and do something else. Our programmes are much more flexible and much less structured and so we’ve had some companies that have gone through it in about five or six weeks, we’ve had some that have taken five or six months, we’ve got one that was one of the first into the programme back in 2016 and it’s still in the programme. The why, why we did it is, well it’s… that’s a bit of a more interesting question and maybe we are a little bit different to some of the other firms that you’ll have seen doing this sort of thing. The why for us, well there is a lot of reasons why but I think actually the next graphic probably sums it up best – if this will work. There you go. So back in 2016 it sort of kind of speaks for itself really doesn’t it, you know you look back at what was happening in the business world over you know, over the previous ten or fifteen years or so and you know, it’s kind of obvious to us all that the world is just becoming more and more digital, more and more tech orientated and whether or not you know, the Apples and the Googles and the Microsofts' are your clients or your target clients you know this is really something, this is a phenomenon that we see across the business world from our perspective but many of the organisations, in fact I’d say most if not all of the organisations that we deal with as clients or we are aspiring to deal with pitching to are becoming more digital in their outlook, are thinking more about the way in which technology is either going to incrementally innovate or in some cases transform their businesses. So for us back in 2016 you know it was, it was frankly a lot to do with staying very relevant to our clients, you know we wanted to be retaining the clients that we worked with over many years and we wanted to be winning new clients and actually to do that we felt we had to in some sort of very tangible outward facing way demonstrate both our knowledge and commitment to technology and innovation in general and actually to be able to sort of walk the walk as well you know, if your clients want to be dealing in cutting edge technology, they are going to want lawyers that understand what’s going on in cutting edge technology and unfortunately quite a lot of the big organisations, the sorts of groups you are seeing up there on the chart , whilst they are very keen to getting into technology they are not necessarily the fastest moving creatures in the business world and so to really get down in the weeds and understand what’s going on in tech you’ve got to be working at the coal face and you know, that’s something that we were already doing in a sort of unorganised way – not a disorganised way – but an unorganised way and so what we decided we needed to do was put a bit more sort of formality and organisation around what we were doing and present it in a way that our clients would understand so that’s what we sort of started out to do and as part of the project of deciding how to structure it and what it should look like we started to look at our clients or some of the clients that we potentially were pitching to around that time and it became apparent very quickly that it wasn’t just the obvious you know, technology companies and some of the big financial institutions that were engaged in some sort of digitisation strategy or innovation project but companies from every sector imaginable pretty much was getting in on the digitalisation act and so for us actually it then became a very easy decision, there was a very compelling business case for us launching the programme that we ultimately launched which is an incubation programme, legal incubation programme for small companies doing very interesting things in the technology space primarily and the reason they are very interesting is, well firstly, objectively its interesting stuff if like me you are someone who is quite into what’s going on in the tech world at the moment. It just makes for a more interesting day job to be involved at the cutting edge and doing that but importantly, far more importantly for business case reasons it’s because its stuff that’s of interest to organisations like these which are you know, at the time were the clients or potential clients that we were, you know, we were being asked to talk to. So that was the background really, that’s the why did we do it and this is broadly what the programme looks like in our case. So we have an application season for companies to apply to us. We don’t have very strict eligibility criteria. We do have some judging criteria but if you get into the programme you receive £30,000 worth of value and we had to, we felt we had to put a number on it to make it tangible, to make it understandable that you are getting something really quite valuable if you get into the programme but its intentionally quite flexible about what that value means, it’s not just measured as a certain number of hours. We are not the sort of law firm that bills on an hourly rate basis anyway so that wouldn’t have really made sense for us. We wanted it to be something a bit more holistic as well so we’ve got this core package of legal support – obviously it’s a legal incubation scheme – but what we’ve put around that are the add-ons, value add-ons so access to various model documents that will save time, opening up a rolodex effectively making introductions to our other clients, making introductions to other influences other facilitators whether that’s regulators or to VC’s or to other entrepreneurs and then coaching services as well which sort of draws on the other non-legal experts we’ve got in the firm, people like our Coms team, our HR team, you know if you are a small start-up and you’ve got to fire a bunch of people and you’ve never done it before it’s quite handy actually to be able to talk to someone who has had to do it occasionally. So it’s a holistic package and as I said earlier there’s no sort of start date and end date, you come into the programme, you make use of the services that we are offering you, once you get to the end of that runway we give the clients a signal that you are beginning to reach the end of the runway, that starts a conversation about the way in which we might continue to work with you as an organisation going forward as a, if you like, a normal client and so far of the four that have graduated the programme, all have gone on to become normal clients of the firm and are now fee paying clients so for us to date at least it’s been a great success, we’ve been harvesting a lot of knowledge that we might not have otherwise had access to harvest. We’ve been creating track record that’s then enabled us to go to existing clients, win new mandates, win pitches that who knows we might not otherwise have been able to win. We’ve been attracting and retaining talent to our firm which is ultimately hugely important to us because you know the new talent is the future of the firm. Young lawyers are really interested in working in this sort of environment and so that’s been really good for us as well. We’ve generated of course some good publicity I hope and ultimately we’ve been giving back into the tech community which in London, in the UK at the moment is a big growth area, it’s important for us particularly in the sort of broader macro environment that the UK is currently having to act that we do as much as we can to try and support small and medium sized growing businesses in London and beyond. So for us it has so far felt like it’s a kind of win, win, win programme. I think I’ll leave it at that and let some of the others go.
Shruti Ajitsaria
Allen and Overy
Thank you. Am I on? Okay so I am Shruti and I am heading up Allen Overy’s tech innovation space which is called Fuse. So my history really is I am a derivatives lawyer, I was a derivatives lawyer for A&O from 2004 and clearly I have no business doing anything related to technology or innovation given that I can barely switch on my iPhone but a couple of things happened to me which led me to where I am today and that’s what I am going to talk about. I was doing derivatives and really loved it but in my spare time as I think Ari mentioned at the beginning I was doing angel investing so on a Sunday night I would meet small businesses at my home in North London, we’d have some pizza and beers and I would chat to them and decide whether or not I wanted to invest in their businesses and I started off investing in restaurants and bars and shoes and things that I could understand and then one day invested in a quantum computing business and started to move into technology so be it adtech or other stuff and one evening, a Sunday night a business called Clause Match came through my door and the Founder walks in and he says to me ‘well I know you are a derivatives lawyer and I hate to be the one to tell you but people are not transacting derivatives documents in a smart way’ and I was horrified and I was kind of like ‘well I am Allen Overy, do you know who I am, what are you talking about’ and I sort of gave him five minutes and thinking ‘God this is going to be quick’ but he started to explain how actually the process of doing vista documents in word makes no sense. I can see someone nodding. It does, it makes no sense because you are putting lots of different clauses into a word document and then you print it off and then you sign it and then you stick it in a cupboard and when Lehman Brothers went bust a big, big part of the job really was finding those pieces of paper from the cupboard, people trying to figure out is this a signed version, is this a draft and then you read the entire document looking for a clause which 90% of the time is standard and tells you what to do in a bankruptcy so his point really was if everybody had been transacting on a platform then when Lehman Brothers went bust you could have pressed a button and you would have immediately have known what needed to have been done, within what timeframe. You could have immediately have said these are the signed documents, this 80% has exactly the same bankruptcy clause and this 20% is different and this is how it’s different. And of course that premise makes total sense and so I invested in the business. But then I came into work on Monday, switched on my computer, opened word and started typing and I just couldn’t really figure out how as a lawyer I would get from doing things the way I had always, always done them to making a change and doing it slightly differently. I just didn’t understand what that process would look like and so I started to think about how we should try and work better in a law firm. I am just a lawyer but I wanted to work better, that was literally all that was. Shortly after that I went on maternity leave and applied to Google’s Start-up School. So Google have a hub in Old Street in London where they support start-ups and they do a three month course for people with small children so you turn up, you can go with your baby and you get lessons in how to start your own business and I did three months of that and learnt lots about how to do your own business all the while plotting how I would be opening a tech innovation space in my own law firm. So arrived back from maternity leave and happily the senior partner was thinking along similar lines and we set about opening Fuse. So we got Board approval in February of last year and then took six months to knock down some space, build a new collaborative working space, run an application process, take in some legal tech companies and we opened our doors formally to views in September 2017. So just I suppose the point of Fuse really, I was listening to Robert Brodie’s talk yesterday and he said a couple of things that really resonated with me. One of which was that lawyers are scared of technology and the other being that lawyers lack as competence to use technology and those are the two things really that we are trying over in Fuse, we are trying to lower the barriers to entry for lawyers, we are saying here, within our own building are some different technology companies, come and just have a look, have a listen, have a demo, touch and feel it, take someone your documents and show them what you do now and ask them about how you can do it differently, is trying to make the process of change much easier for people and when people ask me why we would do that, it’s interesting because Robert Brodie also said yesterday something that I have called him up on, didn’t agree with which is that lawyers have no reason to want to change and I don’t agree with that because whilst the billable hour is king and you know that does sometimes make people think that lawyers should be inefficient because you want as many billable hours as possible, you have to remember that you are only going to get the billable hour if you actually win the mandate in the first place and clients are becoming more and more savvy and they won’t give you the mandate if you say you are going to do a manual review of documents in a case where you should be using technology and you should be doing something quicker, faster, more efficiently, better. So I think actually lawyers are more and more incentivised to use technology because that’s the only way in which we are going to win the deals and that’s I think genuinely where the law firm of the future needs to be. So from an internal perspective we have regular show and tells which means that each of the tech companies that we house within our innovation space get opportunities to pitch to our lawyers. Just five minute pitches to wet people’s appetites and it’s from that people actually say ‘well actually hang on a minute I’ve been doing this this way this entirety of my life, are you telling me I can do it better? Are you telling me I can do it like this?’ and that’s where we are generating pilots from. But the thing that has been the most surprising to me and has genuinely given me the most joy is the client response because just as much as our own lawyers are looking for technological solutions our clients realised that they need to start using technology but they are in the same place as us in that sometimes they also fear technology and sometimes they also lack the competence so we are also giving our clients exactly the same experience which is the opportunity to touch and feel the technologies that we have chosen. People often ask me what’s in it for the tech companies that we’ve chosen so we don’t have a price of entry, we don’t take any equity, we don’t charge any rent, the whole thing is for free and actually for them sometimes what they get will be different depending on what the company is. So sometimes someone will come in with a product that they are not sure is 100% right and doesn’t exactly it the needs of a law firm and for those companies we will test the product over and over again and give feedback until we feel they’ve got it right. For others they are looking for used cases in different areas. You may have an AI provider that has got lots and lots of litigation cases but nothing in corporate or banking or real estate and by getting lawyers from different departments down to see what can be done we are generating lots of different use cases so that they can take that into the wide world themselves. And for others we are making instructions and helping them to get work with our clients so it’s the best shop floor that they could possibly have. They have the six months with us after which they graduate so our current cohort which started in September has come to an end and we’ve got a new lot starting in May. I just wanted to say a word on our selection process because it’s done in-house and it’s quite a sort of big deal I think. We do it by sort of two stemmed process; the first is that we only take someone in if we have an A&O sponsor that is a partner in the relevant area in which that company is operating. We’ve heard lots, over the last two days about culture and trying to change people’s mind-sets and trying to make people embrace technology and actually for me the last thing in the world that I want to do is take in a start-up, say in litigation and then have them sit in a corner and be ignored for six months. There is only any point in bringing them in if the litigation partner says to me ‘Shruti I love that, I’m going to use it. I’m going to show it to my clients, I’m going to pilot it, I’m going to help them make it better’ and we do of that work up front so no one is disappointed; and then the second piece we do is we have an external selection committee which has on it a VC, a financial institution, a fintech and a really forward looking corporate client – the idea being that we bring in the companies, they get some time to pitch and we ask questions and then our clients say ‘well I would use this or I wouldn’t use this or I’ve seen a competitor’ and the VC will tell me ‘actually they are going to run out of money half way through your programme so this is going to be bad press, don’t do it’. So we try to take in a range of different options but as I say to me the most important voice is the Allen and Overy voice. Just a tiny word on the sorts of things that we have been achieving whilst we’ve had our first cohort in. I wanted to give the example of a company called Legatics which is a start-up which is trying to help with conditions precedent process in banking transactions so they came to us, they had great technology and they had said ‘a few banking people saw it, they liked it’. We did a pilot, great. We did another pilot, one in Dubai, one in Australia, fine and then I took them to the Allen Overy Global Partner’s Conference and they had the opportunity to demo to every single banking partner across our firm and then I spent a week getting phone calls from banking partners which let me tell you, are not necessarily the most tech happy people saying ‘Shruti I really want to use Legatics on my next deal, when can I use Legatics, how can I use Legatics’ and so happily we have been able to announce a global roll out of their technology throughout our banking firm and it doesn’t stop there because we’ve also said actually we like what you are doing in the banking space but you could apply that in corporate so we are actually going to look at trying to help them develop additional use cases. We’ve done a load of other stuff, I think the only other one I wanted to mention is we helped a company called Navora who were doing some really interesting stuff in the blockchain space I know there’s lots of blockchain chat over the last two days but we helped them with two world firsts. So the first was the issue of the world’s first ever cryptocurrency bond on the public blockchain followed then by the world’s first ever issue of structured bond on the public blockchain. All of which was overseen by the FCA and we had a huge room of banks watching the entire thing and that has been really cool because it means that when people talk about blockchain we actually understand for ourselves what that means and what transaction looks like because we’ve touched and felt and done the documents for it ourselves. So as I say, we are coming to the end of our first cohort. Our new cohort will start in May. What I have loved the most about the entire process though is seeing what a leveller tech can be because I’ve spent my entire life in a law firm which can be quite hierarchical and the way in which you are the best is to be there for the longest and actually it is a real breath of fresh air to see that the junior lawyers can come up with an idea and lead something and do something really special themselves and they are able to have just a good an idea as the senior lawyers and for me this is the beginning of something really special because we are genuinely starting to inspire our lawyers not to be scared of technology and to have the technological confidence. That’s it.
Nick Kirby
Mishcon de Reya
Am I on? Yeah. As Ari has already introduced me, I am just going to explain a little bit about why I am here before I talk about MDR Lab. So two years ago I was given the opportunity by my firm to split my role between being a lawyer and focussing my time on changing the way we can deliver legal services and my firm had just outlined a ten year vision that they wanted to be technologically transformed and what they were basically asking was do you want to be at the heart of that transformation? And at the time no one else had become a technology specialist, which is what we call them now, there was no MDR Lab, you couldn’t even get an MDR Lab t-shirt so the question was really for me was is the change in my role going to be good for my career? Was there going to be an advantage to be focussed on technology? And you know most importantly, would it be interesting for me and my clients? And in the end the conclusion that I came to was that I did want to be at the centre of the change that my firm was going through because the purpose of the technological transformation was to improve and innovate the way that we are going to deliver client services and I am also just curious and interested about the change that technology is going to have on the legal industry. So that’s how I got involved in the Lab and why I am here today talking about it and MDR Lab is Mishcon de Reya’s incubator. It’s a programme for tech start-ups in the legal space and I head up the real estate category. Incubators are not a new concept, they’ve been used by many industries and lawyers have borrowed good things from those industries. And at its core our incubator is much like any other, we help businesses and start-ups with their ideas and we provide a wide variety of assistance from business and commercial know how, subject matter expertise, office space and free coffee. An incubator gives us access to new technologies. It gives us access to dynamic individuals that make up those start-ups and it also gives us a unique opportunity to guide product development in a way which benefits both the firm and the start-ups that we cultivate. So I don’t have enough time to go into too much detail about why a start-up would want to join an incubator but I just wanted to mention three things. The start-up gets meaningful engagement from the consumers of its product, i.e. the day-to-day users, they get a safe place to test their product and to test new features, they get people who are friendly who aren’t going to criticise them when things go wrong and they get to really understand how a law firm works and how to sell into them i.e. who do they need to impress and who holds the purse strings. In our experience start-ups get the most out of an incubator if they are willing to dedicate one or two senior people on a close to full-time basis for the whole programme and depending on where they are in their product lifecycle we’ll be wanting them to test their product hypothesis, to build their minimum viable product or if they are a bit further along, to test one or two new features on our lawyers. We had over a hundred applications this year for MDR Lab, we shortlisted twenty of them to come to pitch day and after pitch day we had six that are now starting in nearly a month. We’ve got a great mix of start-ups in our core areas so litigation, real estate, transactional and cyber and we are really excited about them. Each company should have its own reason for starting an incubator and at Mishcon ours is fundamental to our business so we want to be technologically transformed in the next five years. And what that means we want to be automated in processes and tasks, we want to be utilising machine learning and we want to be using cloud technology in every day legal practice by 2023. And launching an incubator is just one of the ways in which we are going to drive change. The other ways that we are going to drive change is that we’ve got strategy managers that generate new ideas alongside or technology specialists, we’ve got legal knowledge engineers who are implementing those changes on day-to-day basis, we’ve got head of analytics and machine learning and we’ve got relationships we’ve forged with Universities to generate new ideas that we will use in the future. We’ve even got an Academy dedicated to project management and blockchain. As the firm’s real estate technology specialist I am in charge of finding ways to use tech to change the way we deliver legal services and that role poses interesting and exciting challenges on a day-to-day basis but changing the behaviour of lawyers is hard. They are creatures of habit, often not unfairly afraid of new technology that it might not deliver everything or anything that it’s promised and I am a bridge between that new technology and those new processes in order to help smooth the way for transformation. In order to deliver real change in a law firm I genuinely believe that you need to have your technology specialist as domain experts because then they really understand the problems that lawyers are facing on a day-to-day basis and that they can deliver bespoke solutions. An in-house incubator provides a safe place for our legal teams to mess around with new technology unafraid of how it might impact their client work. So last year as an example, we had a start-up called Orbital Witness, they are a space tech start-up looking to revolutionise the way in which real estate due diligence is done using satellite imagery and they started the programme with just an idea. So they spent twelve weeks building their product from the ground up and they ran all their design sprints in the middle of our real estate department in a sort of fish bowl meeting room where everyone could look at them and honestly you’ve never seen real estate lawyers so excited. Well not since the last Law of Property Act was released and we had partners and paralegals drawing all over the walls, excited and animated about what this new technology could do to our industry which is a big, big change to the fear or new tech which we have seen in the past. So we had over a hundred people exposed to those dynamic and exciting individuals that make up every start-up and their excitement about new technology is catching which is exactly what we want because then we can leverage that excitement to introduce new processes. We can use the newly discovered excitement about technology to shape the way we work in the future. So this year we wanted to capitalise on the momentum we generated last year and we launched a dedicated real estate category which was co-sponsored by two clients because ultimately the change that we wanted to introduce is not change for changes sake, we want to transform the way we deliver legal services for our clients’ benefit. Clients have been calling for change in our industry for many, many years and there is no doubt that all this new technology we are seeing is disrupting the way our lawyers work and I think that disruption will be a real driver for positive change in the industry so bringing two clients along on the journey helped us better understand what they want us to change and what their priorities are. It allows us to appreciate in a meaningful way what they want us to do and I believe that if we embrace change and embrace innovation we will be able to deliver great service, we’ll have satisfied clients, we’ll have a better business and happy and engaged employees. So launching an incubator won’t be for every law firm but it has jumped started change in Mishcon de Reya.
Ari Kaplan
So I want to get a sense from the audience, is there anyone here whose firm has an incubator? Oh so can you, you sir on the corner there can you tell us about it? What firm are you from? Oh wait do we have the box? Oh there it is okay. Thanks.
Audience
Hi my name is Gerard Wentink, I work for Baker McKinzie. Baker obviously is a little bit different animal than Slaughter & May’s and the Overy’s of this world but what we do here in Amsterdam, I work for the Amsterdam office is a little bit different we partnered up with an incubator outside of our firm and we actually set up shop in the building between the start-ups so we have office space there. My vision was that it is very hard to be a venture capitalist so many firms in the Netherlands they use the start-up environment as a marketing tool. They have contests and the best five or ten company start-ups they will be chosen and they can make use of a certain of hours or number of hours or value like we’ve seen before but we are lawyers, we are not venture capitalists and they have difficulties already as it is to pick the winners of the future so we put that aside us and simply try to be with them and be in the same environment and that’s of course what they all create but without having to choose who do we think will be successful in the years to come and just be there.
Ari Kaplan
Nice, thank you very much. You know what his prize is right? You will receive your very own New York City subway map sir, you will come to see me afterwards, we will shake hands and I will give it to you. Now how many other people, I won’t ask you about your firm but I am just curious so, one, two… anyone else? Three. Interesting. Are you large firms? Large. And also you in the back? Large also. So then should every firm - Nick mentioned maybe it is not for every firm - but should every firm have some kind of incubator? You all made it sound so appealing and so successful.
Ben Kingsley
Slaughter and May
Well no I think is the answer. I think one has to be quite thoughtful about why you want an incubator and what sort of incubator you might want and that’s likely to be driven by your business model. And as we’ve just heard, you know, we’ve each got incubators but they are doing very different things and so I think there’s potentially some really great reasons to do something that looks like an incubator but I think you’ve got to be really careful about thinking about what do you want to get out of it, what does success look like and for some you know that will mean doing something a bit like what we’ve done but there are lots of other models for doing this sort of thing. I mean in our case Fast Forward is just one of a number of initiatives that we are running in the fintech and emerging tech space and we are also doing things, I mean a little like the gentleman from Bakers, you know looking at ways in which we can team up with existing structures out there so I am just launching a helpline with one of the sort of co-working spaces that’s local to us as another fairly easy means of reaching you know, a new network of start-ups that probably don’t have access to high grade legal advice but...
Ari Kaplan
So your helpline, they’ll call in and get your legal advice?
Ben Kingsley
Slaughter and May
Yeah effectively. It’s not a traditional helpline. I’m calling it a sounding board because it is more a sort of, you know, a strategic opportunity to talk to a lawyer rather than just asking for legal advice because again there are plenty of law firms out there, certainly in London anyway where you can go off and get some sort of you know, cheap basic legal advice if that’s what you want but for me that would serve no purpose because it doesn’t help me to learn anything, it doesn’t help me win new clients, it doesn’t help me to serve my clients better. It’s a very, I’ve got a very particular motive for wanting to do this thing so I think, great that lots of law firms are doing it and I mean this is one space where I feel there is very little sort of competition you know I regularly say it’s great what A&O are doing because it is great and its different to what we are doing you know, there are other law firms in London, Mishcon’s, Simmond’s, Addleshaw’s, we are all doing these sorts of things and it’s great that we are all doing it because it’s helping to keep the small and medium sized companies in, in the UK sort of buoyant in some ways so we should try and do it where we can where it makes sense but we shouldn’t do it for the sake of it.
Ari Kaplan
So is the consensus not for everyone? I get the sense that should you… I have this image of people waiting outside your door coming to talk to you about their… you know you are the angel investor, it seems like sure anybody should do it but you also think maybe it needs to be selected by firms?
Shruti Ajitsaria
Allen & Overy
I think it has to be selected and also you have to be really careful about who it is that does it. I think that actually listening to you both speak it is interesting that all of us are lawyers and we all have practice areas that we are probably still in touch with and mucking in and you know actually that means that there is… you’re not, you are bridging the divide really between what the start-ups are doing and what the tech companies are doing and what the lawyers are doing and I do think it needs that person to be, it needs to be quite carefully selected because you do need to be able to understand the two different worlds quite well, it’s really important.
Ari Kaplan
So I am curious about something though, so Fuse doesn’t really have a focus right in terms of what it’s investing in. MDR Lab is really focussing on proptech, property?
Nick Kirby
Mishcon de Reya
No so we, well we have a real estate category.
Ari Kaplan
Yeah.
Nick Kirby
Mishcon de Reya
And we also… it’s all our core business areas so real estate, litigation, transaction and business of law and cyber and the reason why we are focussing on those areas is because of the reason I talked about. We are doing this because we want to change the firm and we want to drive transformation across the board and like Shruti says, if you have people that are interested in each department, that’s what you need, you need a cluster of interested people because that’s the whole point of doing it, is to have the driver in each department to help get people excited about new technology, to change their mind-sets from being afraid to being excited and you know if you don’t, if we went off and did something in you know, derivatives, we don’t really do derivatives so it would be pointless for us, we are not, we are not going to focus on an area that isn’t a core of our business.
Ari Kaplan
Please feel free to ask questions. Anybody have a question in the audience before I ask my next question? Yes.
Audience
I have a question for Shruti. What was the biggest fears of the lawyers towards Fuse and how did she cope with it?
Shruti Ajitsaria
Allen & Overy
Yeah I mean I actually approached it, Fuse I suppose in the same way as you would do a start-up. So I have developed where we are today but I am always being asked the same questions and I would say where I am now is not stuck in stone and I am sort of looking at a few different things so the two biggest concerns I get are firstly, why don’t we take equity in the businesses that we take in and are we missing a trick? And are we giving something for nothing and is that the right thing for us to be doing? And the second question I get asked a lot is well it’s all very well we have this physical space in London but how does that translate to our global offices so if you are based in Singapore, how are you supposed to connect with what we are doing in Fuse. You know I can barely leave the London office now before being asked are you going to open a Fuse in Singapore and can you open Fuse in New York but you know we need to think about how to translate that across the entire firm and not just to make it London centric. So those are the two biggest concerns. In terms of the use of the technology though, it is interesting that I don’t want to force anybody to use anything, I just want to give people some options. So I will never say to somebody right we have to use this, and you must be using this and you are doing it wrong because actually different people have got different ways of working and actually I still write things down on paper and that’s how I best think and so I don’t want anyone to tell me to do it differently. I just want though the people to understand that if they want to do something different these different technologies are available and this is how we would go about maybe doing a pilot so you can touch and feel it yourself and have a go and understand what works well and what doesn’t.
Air Kaplan
Do we want to tell her what she’s won? You have won a very British-
Shruti Ajitsaria
Allen & Overy
I brought prizes.
Air Kaplan
-a very British import, that she brought all the way from London. A Fuse phone charger. Oh yeah. You know you want this. I will put it there as an incentive for people. So you mentioned something about not taking any equity. But I think Nick you do take some equity and Ben do you?
Ben Kingsley
Slaughter and May
No we don’t.
Ari Kaplan
So you don’t take any equity, so can you tell us why?
Nick Kirby
Mishcon de Reya
So I think the reason why we take equity and we take it at the beginning before the start-up joins the Lab is that we want to develop an ongoing relationship with the start-up and I think you know, a bit like Shruti said, the people in the business want to know that we are not investing twelve weeks of our lawyer’s time you know, and just to give you an example, one of our start-ups last year they had engagements with litigators, a hundred and fifty litigators throughout the twelve weeks of the programme, they tracked every single interaction which they had so the time that we invest over the twelve week programme is huge and I think what we want to make sure is that if at the end we want to have, we want to make an investment in a business, we can do so without the conversations becoming difficult because we’ve had them right at the beginning.
Ari Kaplan
But you’re not taking equity but you’re eventually converting them. Why don’t you take any equity? He seemed to make a very good point that you should take it?
Ben Kingsley
Slaughter and May
Yeah well look it’s an open question and I wouldn’t say we’ll never contemplate crossing that route. There are reasons why it could make sense, that it can sometimes complicate a lawyer client relationship if you’ve got an equity stake but that can probably be overcome. It can in some cases be overcome. But for us you see, the scheme that we’ve deliberately designed this as a programme that means we are agnostic as to whether or not the companies that come through our programme succeed or succeed in a big way. We are not doing it, almost the last reason for doing our programme is to acquire new start-up clients. We’ve got lots of other ways of acquiring start-up clients and we are working with clients sort of throughout the lifecycle we’ve got. Clients outside the programme that have got sort of seed series A stage, we’ve got others who are you know, series D going into growth. Some looking towards exits. We don’t have a problem getting clients, what we are trying to do through this programme is in a very particular way acquire knowledge, acquire track record and in some ways, speak to our clients about what we are doing, what we are interested in, what knowledge we have and so for us actually the criteria that matters most is, is this business going to have interesting cutting edge legal issues that we can help them solve because if they don’t actually there’s not much, there’s not much reason for us to get involved. So for us the value equation is a very different one. We are not at all concerned with fees, we are not at all expecting that there’s going to be any direct bottom line return for us out of running the programme. It is all about indirect benefit and so for us, whether or not we have an equity stake is sort of irrelevant because we are not betting on these companies to win and for us we took the view it was far easier to not take equity because we avoid any of the sort of regulatory hoops that we might need to jump through and we felt it would just make it more attractive to those that were planning to apply, we were saying look come to us basically it’s a free give away, you know we’re giving you stuff. We are going to ask for something in return you know, we’ll ask you to come in and give some training to our lawyers or we’ll ask you to participate in some client seminar but you are not going to have to write a cheque, you are not going to have to sign away any equity so it’s just for us it made it a simpler story.
Ari Kaplan
And yet four of them have become clients you said so…
Ben Kingsley
Slaughter and May
Yes so far, the four of them that have graduated so far are already fee paying clients. They are not yet at the top of the list of fee paying clients if you know what I mean but there’s a long way to go and you know we are on the right track.
Ari Kaplan
Any other questions? So Shruti why has… it’s interesting the three of you are here from all prominent firms and Ben mentioned a number of others, why has the concept of creating an incubator become so popular?
Shruti Ajitsaria
Allen & Overy
I think and it’s interesting we are all doing very different things so I think for different people it means different things so you know, for some people looking for legal expertise it is the easiest way to access it. For others who are trying to make a move into sort of almost a VC type model it’s a really easy way to access it. For us it really just is about, to me it felt like the easiest way to let people touch legal technology and to just have a go and to try and change the way that they work and so to me actually we don’t really call ourselves an incubator, we actually are just a space in which we put tech companies and it just so happens that lots of those tech companies are early stage and so we often times get called an incubator but we’re not really we are just a safe place I think as you mentioned for people to just have a go and I think it is so difficult for lawyers because we always, we’re so guarded over our documents and we don’t want to do anything that could be wrong and we are so risk adverse and actually you have to give people an opportunity to say ‘right here you have an opportunity just to try something and it doesn’t matter if it goes wrong and no one is going to tell you off and it’s not a waste of billable hours, it’s just a really good experience and you will have tried to do something better and whether or not that works it doesn’t really matter because all of it is a learning experience’. So I think actually for some firms it is just about creating that environment where lawyers can have that learning experience because it is so contrary to everything we are taught as lawyer sand how we are taught to work.
Ari Kaplan
Nick, you integrate clients into some of this technology, is that right?
Nick Kirby
Mishcon de Reya
So no, so most of the start-ups in our business are suppliers in the future. But yeah, Orbital Witness the one that I mentioned is a product that in the future we will probably expose to our clients so they are coming in for a pilot in April/May and we’ll start generating reports using that tool which we’ll send on to clients. So yeah they will be integrated into the whole process and it may well be that the tool that we are using to do DD on real estate will be used by our client’s in the future to do DD. There is no reason why a developer can’t use the same satellite imagery tool to do their DD in the future.
Ari Kaplan
And is that important to associate clients with the technology that is in the incubator? I’ll target that to Ben.
Ben Kingsley
Slaughter and May
Well for us it’s, it’s sort of central to the concept as I was saying earlier because really the reason for us doing this particular programme is it is all about existing clients and getting them engaged and so yeah, absolutely. It helps us to engage our clients in areas that we know they are interested in, it helps us to meet new people, clients actually. Frankly just as law firms are you know, innovating in various ways and creating labs and incubators, so of course are corporate organisations but what you often find is that the individuals who are brought in to run those innovation strategies within large corporate groups you know are relatively new, they are being recruited in from the tech industry quite often and so you may as a law firm have a very longstanding relationship with a corporate client but you know the lady that’s brought in to run the new innovation lab may never had heard of you and so being able to engage with those people you know, on a level and in a language that they really understand by finding ways to invite them in to come and meet some of our cohort or you know, getting in touch to say we’ve got some small companies that are really keen to pitch to you. These are all just additional ways of engaging with our clients and of course it’s not the only way that we are engaging with them in that space but it’s a really valuable additional sort of piece and the BD armoury.
Ari Kaplan
So we have a question.
Audience
It’s actually for each of you. Is there some frustration that you said if I could word this as part of my daily life because incubation sounds so cool but I am sure life isn’t a bed of roses so what is it your frustration for each of you actually? Top frustration in your daily life in incubation?
Ari Kaplan
That’s a good point. Why don’t we start this way.
Nick Kirby
Mishcon de Reya
So I genuinely absolutely love doing it. I am trying to think, I guess the hardest thing for me is balancing my fee earning work and the incubator so you know, even when we are not in the incubator period from May to July, you are always involved and engaged and mentoring the start-ups that have been in the previous round so balancing the fee earning work with the incubator is probably the hardest thing that you have to do when you get involved but I think it completely, just being involved just completely outweighs that because it is genuinely a really exciting thing to be part of, it’s a great thing to be at the centre of in the firm, it’s done wonders for my career in the firm as well so yeah, it’s hard but it’s good.
Shruti Ajitsaria
Allen & Overy
Yeah actually funnily enough I was going to say I don’t think there are enough hours in the day and that is a big frustration because there is always something else that I feel like I could be doing that’s interesting or something I’d like to pursue or someone I’d like to meet or whatever it might be so I find that really difficult and sometimes actually you will come across an Allen & Overy lawyer who just doesn’t get it and you will be presenting them with something so amazing and a real opportunity and they’ll be so busy on their traditional path of I am busy doing my client work as I usually do it and I don’t have time and I am not interested in seeing a demo and I don’t want to change and that can be quite frustrating but actually it’s interesting I felt like I felt that a lot at the beginning of the process and its quickly, quickly changing and I think that’s in part because we’ve had great senior support, so our senior partner has been sat in Fuse, our managing partners been and sat in Fuse, there’s not a minute goes by they are not talking about how great it is and that, that changes the entire culture of the firm, so that has been brilliant.
Ben Kingsley
Slaughter and May
I am struggling I’m afraid a little bit with this, with this one because it genuinely is fun. In my case as it happens, you know we don’t have an issue of worrying how to balance this with fee earning work because this is fee earning work for us, we regard this as client work like any other client work.
Ari Kaplan
So you get billable credit?
Ben Kingsley
Slaughter and May
We don’t have that sort of a concept in our firm. We don’t have any billable hour’s targets and so our lawyers don’t have any incentive or dis-incentive to not be involved in this stuff. I mean if I have got a problem actually it’s how to share out this work equitably amongst all of the associates who are clamouring to be involved in some way or another. It is a really nice problem to have but I’ve just got too many lawyers wanting to be involved and not enough clients to go round at the moment in that sense so I mean I know that’s a sort of you know, false answer but I mean it’s true. It’s fun work, it’s good work, it’s… we are seeing return on our investment you know, we know that we’ve won jobs that are paying serious amounts of fees off the back of being able to demonstrate our track record through having done small scale transactions or advisory work for some of these clients for no fees so we know we are making a return. We’re, as I said earlier, it’s been hugely valuable for us in attracting and retaining talent to our firm so that’s another return. It’s just you’ve got to sort of re-imagine the value equation as I said earlier you know, look at the return as being more than just how many fees did we get to bill from that client. We get a lot more from the relationship than just fees.
Ari Kaplan
And you sir, Nick has brought you something I’ve only seen one other time in my entire life and that is this wonderful MDR Lab shirt. You can’t believe you got it – yes. Okay we have time for one more question, anybody? Do we have a question from the audience? Yes David. Oh the box. That was our blockchain.
Audience
It was a block at least. Do your firm’s make direct investment in companies, I mean do you maintain pools of partner capital or I mean some firms do that. Do yours make direct investment?
Nick Kirby
Mishcon de Reya
I don’t think so, I think this is the only time we make investments as a firm certainly that I know about so I think, like I said, the primary reason for doing MRD Lab is for the change to the firm, it’s just we think we’ve taken this approach that we think that you know, in being able to invest in these companies once they get to the end of the Lab is potentially a good idea but it’s not the main reason we do it.
Shruti Ajitsaria
Allen & Overy
So we do very occasionally. We’ve invested in one of our cohort members, a company called Navora who are doing the bond assurance, the stuff that I mentioned earlier and we have invested in a car pool of companies in the last sort of five years but very, very rarely.
Ben Kingsley
Slaughter and May
Not through this programme is the answer to this question so as I said earlier, we don’t take any equity stakes in the clients that come in.
Audience
But separately do you?
Ben Kingsley
Slaughter and May
We have occasionally made investments in the start-up space, in some cases collectively and in other cases there are groups of partners in the firm who are more active in that space.
Audience
The reason I ask the question is for me that’s a bit of a test for how committed firms and equity partners are if you are actually able to write a cheque. I mean it’s one thing to generalise it through the firm but if you are actually, if you look at other corporations that have R&D budgets, I mean they have risk capital constantly deployed, I think a critique of large law firms is you typically don’t see a true R&D budget so it’s one thing to provide office space but it’s another thing to have partners actually write cheques, that’s why I asked.
Ben Kingsley
Slaughter and May
Yeah I mean it’s a good question, of course we are, in my case, you know I am and my partners are writing a cheque every time we give away advice that we could otherwise be providing for fees to other clients so in that sense you know I have had to get the consensus or I did originally, I don’t anymore but I did originally have to get the consensus among my partners that it was the right thing to do and if you add up the numbers, if you times £30,000 by ten, which is you know, the number that we were trying to get in the door in the first round, it’s a reasonable size cheque actually for a big law firm, it’s not a huge cheque but you are right I think there is a you know, you’ve got to show commitment to the space in one way or another and I don’t think it necessarily means you have to take equity in the companies in which you are investing but.
Audience
My point is not to criticise what you are doing I was just…
Ben Kingsley
Slaughter and May
No, no I realise.
Air Kaplan
Well Nick, Shruti, Ben, it’s been a privilege thank you very much.