Alexius Aims to Upend Traditional Legal Billing
Kevin Hein, front left, with colleagues at Alexius in Denver.
Kevin Hein spent 20 years in traditional law firms, most recently at Faegre Baker Daniels in Denver specializing in franchise law, but he’s now joined with an upstart firm called Alexius that provides defined legal services for a fixed fee rather than all-encompassing work for the almighty billable hour.
“We’re certainly not at the tip of the wave, we’re catching the wave. But you’re going to see a lot more of this, even in franchising,” he predicts. “Because most franchisors are small, there’s significant pressure for those folks to find alternatives to the current model.”
Hein could be considered a turncoat, even though he says he left Faegre on congenial terms, but he demurs. “I don’t mean to beat up big law firms, because I worked there for 20 years, but if you step back you realize there’s a giant disconnect between what the client needs and what you can bring,” Hein says, adding he was billing almost $600 an hour at the apex of his career with Faegre. “I struggled with that. How do you justify in your mind, charging $600 an hour?”
He points to M&A as an example of what he thinks is wrong with the traditional way. On a merger or acquisition, a law firm might charge $700 an hour to put together an entire deal, he says, and some of that work will indeed be hardcore legal services that require a highly experienced attorney.
On the other hand, a deal also requires a lot of administrative work: sending copies of documents; collecting copies of documents. “Never once did they do legal work, and yet the client was paying an hourly rate on what was truly an administrative process,” Hein maintains about past deals he’s overseen. “The truth is, that’s a project management function.”
Alexius might take the project management function on a deal for say, $15,000, while a full-service law firm would do the legal work and bill hourly. “We could take what might have been a $55,000 fee” if a traditional law firm had done it all, “and it came in at 60 percent of the cost.”
Hein said he paid attention to several trends when deciding to join Alexius last year, which he also helped to form by bringing together three colleagues as founders. One was the number of big firms that have collapsed under their own weight in recent years, and what happens to the partners. “And the trustee went back to each of the equity partners and said I need you to pony up money,” Hein says.
He also gets a blurb every Friday morning from the American Bar Association. “There was one about why law firms are getting their lunch eaten,” Hein says, and he thought “it would be interesting to put together a team and build something around this.”
He cited Axiom Law in New York City as the first firm to “deconstruct” legal services, breaking them down into projects and then offering certain services more efficiently.
As for whether Hein is now persona non grata with his former firms, which include Dorsey & Whitney and Snell & Wilmer along with Faegre, he says no. First, Alexius is a tiny start-up and is no threat to the giant law firms in franchising. Second, traditional law firms are looking for places to farm out “bread and butter” work.
“We’re looking at verticals where we can …take the more basic work and handle it in a more efficient manner,” Hein says. “We're not saying fire your law firm.”