Rising star of outsourcing legal services

Dan Fox switched from fronting a band to finding a way to disrupt the legal profession

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Not so long ago, Dan Fox was a heartbeat away from rock stardom. In late 2010, Lost in Flight, the four-piece he fronted as lead vocalist and rhythm guitarist, had an Irish number one with its single Last Breath. It caught the attention of London music industry veteran Tops Henderson’s Phonogenic label, a joint venture with Sony that had just recruited the Script.

A deal needed the agreement of the label’s three partners, but only two were willing to sign the Irish band. “Two out of three wanted us, but we needed 100 per cent and, in the interim, we had turned down a couple of Irish labels,” he recalls. It meant Lost in Flight could not quite land a deal.

It was, Fox says, a classic case of “could’ve been contenders”. So, with rock stardom just denied him, he opted for something even more exciting: he became a lawyer.

There was some precedent. Fox’s father, uncle, cousins and other family members were lawyers, so he took the well-trodden route of studying politics in University College Dublin before going to King’s Inns, where he qualified as a barrister. However, the young Dún Laoghaire man never really practised. Instead, he spotted an emerging gap in the law that he believed could be developed as a business.

Several career moves later, he raised about €1 million last year from backers including State agency Enterprise Ireland, Voxpro’s Dan Kiely, former DCC managing director Kevin Murray, Brendan Coakley, the one-time chairman of Allegro and Stuart Margetson, a former Matheson equity partner, and set up Johnson Hana, which began trading in earnest from its offices in Howth, Dublin, at the start of this year.

Repetitive legal work

Fox’s idea was simple: take routine, repetitive legal work that does not involve getting advice from a firm’s partner and do it cheaply and efficiently to cut clients’ costs.

What Johnson Hana offers, Fox says, is a more efficient way of performing legal tasks that are repetitive and more process-driven. These services include reviewing commercial contracts, non-disclosure agreements, discovery in litigation, data access requests, compulsory purchase orders for public bodies, legal research and elements of the due diligence carried out in mergers and acquisitions.

“It’s relatively broad,” he says, “but the common theme throughout is repetition. What we are saying is that there is absolutely room for big law firms and the work that they do, particularly at partner level. But there is this piece that sits beneath that could be performed more efficiently. That’s the vacuum that we say exists, particularly in Ireland, as we are the first business that is focused on process outsourcing.”

“Outsourcing” is key to what Johnson Hana does. In essence, if a big company or – as is often the case – a big law firm needs to deal with a large volume of this work, it can hire Fox’s company to do it rather than try to manage it in-house. So, for example, as businesses prepared for the introduction of the European Union’s General Data Protection Regulation (GDPR) rules last May, they had to review their commercial contracts to ensure they complied. Many hired Johnson Hana to do this, rather than getting their solicitors’ firms or in-house legal departments to handle the work. The company got its own consultants – who are qualified lawyers – to carry out the reviews.

It is still doing a lot of work in this area. Another mainstay is discovery in litigation. This is where one side in a court case wants to obtain documents – or sometimes other material – from the other in order to bolster their claim and hopefully weaken that of their opposition.

This is a standard part of large-scale commercial litigation. It involves reviewing thousands, even millions, of documents, some relatively complex, but Fox says the bulk of it is often as straightforward as one-line emails between colleagues.

Going through it is repetitive and routine. “I think the argument for using a big law firm is probably less compelling when it comes to the discovery process, where you have people being charged out at €250 an hour for a junior person or a trainee,” he says. “There are certain cases where someone more senior would be required but, as a general rule, it’s a relatively non-complex process and I think a legal process outsourcing provider offers a more compelling value proposition for work like that.

“Recently we’ve been involved in a very high-profile litigation where there was a public body involved and the case was valued at €700 million,” he says. “It was a massive commercial litigation case and we were able to reduce the cost of discovery by around 70 per cent.”

In that case, Johnson Hana worked with a mid-tier law firm whose partners gave the legal advice while Fox’s business took care of discovery. It used technology to review the documents and get them down to a manageable level, which in turn cut the client’s legal bill.

Combining technology with a business run at lower costs than traditional law firms allowed the company to cut charges. While they managed to reduce expenses by 70 per cent in the example that Fox cites – he doesn’t name the case – Johnson Hana says it generally achieves about 50 per cent savings for clients.

While the idea is new to this jurisdiction, businesses here seem to be getting to grips with it fast. At this stage, Fox says that Johnson Hana has worked for Ervia – the State gas and water utility – Airbnb, Tesco, ESB, dating app Tinder and a large number of public bodies.

Johnson Hana has to go out and sell its services, but its chief executive is now seeing more work coming via referrals, something he believes vindicates its approach in the first place.

It is a good deal more nimble than conventional law firms. As GDPR loomed, Fox says a large technology company approached it. The client was facing a deadline that it had neither the resources nor the skills to meet.

“They had gone initially to the law firms and the law firms had said we are completely oversubscribed and we do not have the capacity to look at this,” he says. Within two days, Johnson Hana was able to put together a team under a group of project leaders made up of its own consultants. “They were able to get that deadline complied with in a really effective way,” Fox says.

The firm obviously does not employ partners. Fox mainly refers to the lawyers working for the firm as consultants but, in fact, says they are a mix of full-time staff, contractors and self-employed. They are qualified lawyers who have practising certificates and meet all other requirements imposed by regulatory bodies such as the Law Society of Ireland.

Johnson Hana says it has provided work for more than 120 professionals so far this year. “We have a leaner model,” Fox explains.

He maintains that growing frustration among businesses with conventional legal services helped create the space for his business. It is easy to see Johnson Hana’s attraction to a company whose legal bills it can help cut by 50 to 70 per cent. However, what is the attraction for lawyers, who it is asking to step off a recognised career path?

Fox argues that if many businesses were disillusioned by how conventional legal services worked, so too were many of the lawyers working in that environment.

“We have one lawyer who was previously working for one of the big law firms and she bought into our model,” Fox says. “She has been working for our company and she’s consulting for some of our big customers and she’s doing it on a really flexible basis, working 25 hours a week. She used to be doing 70 to 80. She’s getting a more balanced lifestyle and she’s seeing her kids again which is a really big thing for her.”

Flexible terms

Johnson Hana offers its people flexible terms that may not be available from conventional law firms. While it may be attractive in some respects, is it enough to retain people like the woman in his example, who is presumably well qualified and likely to demand some kind of challenge, or at the very least job satisfaction, over the longer term?

Fox argues that although his company focuses on work at a level below that done by partners, it is still demanding and challenging enough in its own right to ensure that Johnson Hana’s consultants get valuable experience. While in other jurisdictions, firms offering similar services have tended to get into a race to the bottom, he says his company wants to avoid this by focusing on a middle ground between the senior and “very” junior ranks.

“While it’s more repetitive than being a partner and advising on a corporate restructuring, it’s still quite interesting,” he argues. “It still requires someone with real expertise and hands-on experience to undertake the work.”

Fox maintains that about 1,100 lawyers have expressed interest in working for the company. He believes that, within three years, Johnson Hana can realistically grow to a point where annual revenues are about €15 million.

He also has his eye on the international market. The company already has a London office and a presence in Hong Kong. One of its first clients was a large British law firm and his company’s full name is Johnson Hana International.

This is not Fox’s first foray into the business of law. Early in his career he established Prime Legal Discovery, a company based on a similar principle but focused only on discovery. It was acquired by a contracting business, WMI. Fox was part of the deal and continued working for his old firm for a year.

He then left and took some time out before returning to work as an adviser to an un-named “high-net-worth entrepreneur”.

He continued to nurse ambitions to start something of his own and actually incorporated this company in 2015. However, it did not really “grow legs”, as Fox puts it, until the start of this year after he had raised the capital needed to get it off the ground.

“Johnson Hana” is a combination of his mother’s maiden name, Johnson, and “Hana”, a Hawaiian jungle where he spent a summer.

Well-known figures

The company has recruited some well-known figures from corporate Ireland. Brian Montague, former chief executive of law firm A&L Goodbody, and John O’Donnell, chief technology officer of Hostelworld, are advisers to the business. And it has recently appointed David Went, former chairman of The Irish Times Ltd and one-time chief executive of Irish Life & Permanent, as a director.

It has also added Tony Keohane, chairman of Ervia and previously chief executive of Tesco Ireland, to the board. Stuart Margetson is chairman while Dan Kiely is also a director.

“We have a really strong leadership team and these are people from within the business and legal community, who are saying actually, this business is ripe for disruption and is ripe for change,” he says.

Fox frequently describes Johnson Hana as disruptive. However, he acknowledges that it often works with – rather than against – established players in the sector. “If you take what we do with discovery as an example, a lot of law firms actually think this is really valuable because it frees up internal staff to look at the more value-added tasks,” he says.

“The way I look at it, a lot of the work we are doing wasn’t getting done realistically, at least by big businesses,” Fox explains. He points to the example of his technology company that found itself up against the GDPR deadline. “They were referred to us and they were looking for an alternative legal services provider. We were the only ones doing that here.”

As much as anything else, Johnson Hana is moving into a growing area of demand in legal services. We live in a world where the regulation is increasing – GDPR is just the latest example – while an expanding number of rules govern key industries for the Republic such as banking and financial services. Not all the work associated with this needs to be done by a senior partner in a traditional solicitors’ firm.

Fox argues that his company’s disruptive force is its model which, he says, attracts businesses frustrated with the conventional way of doing things and compels others in his industry to look at how they provide services.

“I do think that we are driving change,” he says. “I suppose there are forward-thinking law firms out there and it’s those firms that see our services as being complementary to theirs. But I also think that law is old-fashioned, it’s traditional and I think that the industry here is ripe for change.”

C.V.

Name: Dan Fox

Age: 33

Position: Chief executive, Johnson Hana.

Family: Married with a nine-week old baby.

Why is he in the news? His company has just recruited heavy hitters David Went and Tony Keohane to its board and is setting out to make waves in legal services.

Career: After graduating from University College Dublin he went to King’s Inns, where he qualified as a barrister. However, instead of practising he set up Johnson Hana’s forerunner, Prime Legal Discovery. After selling that, he took a break. He set up and launched Johnson Hana earlier this year.

Interests: Music – he plays the guitar – golf and walking.

Something you might expect: A large number of his family have worked as solicitors and barristers.

Something that might surprise: He spent three months in a Hawaiian jungle.

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