With January underway, I would like to report on our company’s performance in 2020 and what lies ahead.
The year started with the successful completion of integrating the acquisitions we made over the previous eighteen months. During Q1 2020, we simplified our org structure, e.g., combining our Business Services for law firms business unit (BU) with our Business Solutions for law depts BU, to create one Legal Ops BU serving both law firms and law depts.
Amidst the past year’s volatility, our customers prioritized efficiency and cost management more than ever. Digital transformation and operational resiliency leaped to the top of their agendas, from a ‘nice to have’ to a ‘must-have’ capability for business enablement. Many leaned on us to show them how we’ve created and manage high-performing remote legal teams. Elevate has been built digital-first from day one. Cloud-based tools, digital processes, and comfort with remote working, videoconferencing, and online collaboration are business as usual for us. Our Business Continuity Team launched our COVID Response Plan in mid-February, so we smoothly adjusted to pandemic-related restrictions and lockdowns, keeping our people safe and serving customers without disruption.
Fortunately, we had planned for an economic slowdown during 2020 – although not for COVID reasons. We entered the year with a strong balance sheet following our $25m capital raise from Kayne Partners in 2019. Although Q1 results were on plan, we asked our people to participate in a 10% compensation reduction to proactively prepare for the sudden economic uncertainty faced by businesses everywhere. This allowed us to keep our team together and retain our talent and expertise for customers throughout the year, and we have started returning compensation to normal. I am pleased to report we ended 2020 with revenue of just over $79m, which, although below budget, was less than 3% below our prior-year results.
In 2020, we witnessed the arrival of “The Big Four” to the business of law. We welcome them, kinda 😃. We expect near-term competition for customers and talent as the Big Four launch their legal ops businesses, primarily as a pathway to securing their real target, the legal advisory work typically provided by law firms. However, we believe that their entry will accelerate the education of CFOs and CEOs generally on the business of law, growing the market, and increasing the availability of legal operations-savvy talent in the future.
We extended our practice of law capabilities through our ElevateNext Alternative Business Structure. We reorganized our consulting business around customers’ needs to achieve outcomes (what we call “Jobs To Be Done”) by integrating our multi-disciplinary business of law and practice of law services with our technology and expertise. This was led by hiring Stephen Allen as VP of Get Sh*t Done. Stephen previously was responsible for innovation, data science, legal tech, digitization, and disruption at Hogan Lovells. And we invested in our digital capabilities, headed by Brian Kuhn as VP of Digital Strategy and Solutions. Brian is an expert on the practical application of AI, having previously led the IBM Watson Legal business.
Elevate’s leadership worked harder than ever this year to understand customer needs and behaviors and predict opportunities and risks while fostering agility, adaptability, and resilience. We launched Elevate’s Next Normal Leadership podcast in September 2020, which has provided us with valuable perspectives and insights from some of the legal industry’s leading minds.
Business leaders are now planning a path to a post-pandemic future. We’re helping a growing number of our customers implement digital solutions to adapt to the next normal. As managing uncertainty and remote work continue to be priorities, we are working with customers to design, build, and operate more efficient operating models that are also more flexible, adaptable, and digital.
I predict 2021 will be The Year of the ELM (“Enterprise Legal Management” software) in legal tech. After a decade of proliferating point solutions, e.g., for workflow, spend management, contract management, dashboards, etc., the CEO’s digital agenda demands a legal ops platform for GC that eliminates the challenge of tying multiple applications together, connects previously siloed data, generates useful insights and reports, and integrates with CIO-approved enterprise software. While these platforms have been around for a few years, several (including Elevate’s own ELM legal ops software) have now reached maturity in their breadth of capabilities, ease of use, infosec, and mobility, with built-in AI, to connect end-to-end workflows, reduce cycle times of routine legal services, and provide useful information intelligence. 2021 will see more law departments and law firms adopt ELM to become a more efficient and effective strategic partner to the business they support.
On the business front, I predict consolidation of law companies, driven by buyers looking to simplify and better manage their supply chain; and providers looking to achieve scale, capability, footprint, or to remain viable in an uncertain economy. I’ve been wrong about this before, but I expect a slowdown of net new institutional capital flowing into the legal industry this year. However, I wouldn’t be surprised to see some law companies change private equity hands. Finally, I see law firms and law companies collaborating more than ever, competing with the Big Four to solve increasingly valuable business of law problems for customers, each playing to their strengths and investment focus.
Like any other business leader, I’ve thought a lot about social justice and sustainability this year – and the role of business in society. In late 2019 we launched our ‘Workplace of the Future’ initiative to help us with community and belonging, connecting our programs for equitability and inclusion, sustainability, corporate social responsibility/volunteerism, wellness, and learning and development. One of the 2020 outcomes of Workplace of the Future was the ground-up development of our Principles by people from every location, department, and level. We commit to welcome the full kaleidoscope of beliefs, thoughts, identities, and experiences that our people bring. Every day we choose to contribute our talents to Elevate to help customers, we commit to value the whole person, whether they be Republican or Democrat, Tory or Labor, conservative or progressive, Hindu or Muslim or Jewish or Christian or atheist, Black or Caucasian or Latino or Asian, male or female, Filipino or Indian or Polish or American or French, working-class or middle class or wealthy, straight or gay or bi, capitalist or socialist, Brexiteer or Remainer, vaccine-advocate or anti-vaxxer, climate-change believer or skeptic, Irish Catholic or Protestant, able-bodied or disabled, old or young, etc. While we do not always agree with each other, at Elevate, we will not insult each other, or tell each other what to think, believe, or say. Neither will we compare each other to something less than human, nor will we ‘cancel’ each other. Our strength comes from our choosing to work together, showing courtesy, respect, and friendship towards each other.
Having navigated one of the most VUCA years in our collective lifetimes, I recommend we prepare for more of the same – this is going to be a long-distance race. The pandemic continues to test business resilience, forcing us all to reimagine how we work, serve, and lead. Digital transformation has arrived at least five years earlier than most of us planned. Companies are developing brand new working practices, policies, and compacts with our people, ranging from virtual work to social justice and corporate activism. And I don’t expect the pace of change to slow.
Amidst this change and uncertainty, success is not about having a perfect plan; it’s about working with smart, caring, energetic people who recognize when it’s time to revise the plan and take action to course-correct. For that, I am deeply grateful to my talented, hardworking colleagues. And on behalf of all of Elevate, I wish to thank our customers for placing your trust in us.