When it comes to thought leaders in the legal industry, they don’t come much bigger than Mark Harris. Twenty years ago, Harris co-founded Axiom, now one of the biggest, oldest, and heaviest-hitting Alternative Legal Service Providers in the world. These days he’s running a spin-off entity called Knowable, which is focused on contract management. Few can claim to have changed an entire industry, but he’s one of them.
So when Mark Harris pens an open letter to the business world, as he did this week, it merits attention. Harris generously shared a draft of the letter that he and Alec Guettel, Knowable’s CFO and Axiom’s co-founder, wrote. He also granted me an interview ahead of publication. It’s a heck of a conversation piece.
While I’d recommend reading the letter in full, its central insight is a practical one: “Large companies are constructed of hundreds of thousands of commercial arrangements in all directions[.]” In the abstract, we all expect COVID-19 to place an immense strain on those arrangements as supply and demand sharply rise and fall, as customers or suppliers go out of business, and as consumers change their basic habits.
What Harris teases out is that our responses to these changes will be dictated and constrained by the contracts our companies have entered into, but most companies have little or no idea at any given moment what’s included in those contracts. While most companies will soon have an urgent need to review and understand their contractual obligations, far too many struggle to even find copies of the relevant agreements once they need them. If the basic contract can be found, pulling together the various addenda, modifications, waivers and such that tend to accrete over a business relationship can be more difficult still.
Harris witnessed the disaster that played out in the 2008 financial crisis. As the stock market tumbled and mortgage-backed securities collapsed, “… the banks were paralyzed. It wasn’t that they themselves were in financial peril, it was that they were contractually committed to all kinds of other institutions and had obligations in this complicated web of commitments and promises and dependencies, and it was completely opaque to them… . It did get sorted out, and the regulators parachuted in for the next six or seven years, and it turns out that having more visibility into their contractual commitments made their businesses a lot better.”
Harris and Knowable are offering a solution to the problem they see coming. As a response to COVID-19, and in anticipation of the difficulties the business world is gearing up to face, Knowable is offering a basic version of its contract management software to all companies free of charge. Harris is up-front that the offer is equal parts altruistic gesture to help struggling businesses and a self-serving effort to onboard new customers. Both in his open letter and in our conversation, Harris was thoughtful about trying to combine compassion with business-savvy. At the same time this product is being made available free of charge, Knowable has ceased sales calls to potential new customers out of the sense that doing so would be tone-deaf and off-putting. “While we’re sensitive to that, we’re not ashamed of it,” he told me. “What I believe in more than anything is a for-profit company out to do good, out to actually help and solve real problems. It’s understanding that the point of the game is to win, but to win for the right reasons and in the right ways.”
Harris’ anxiety reflects the difficult needle that business leaders are having to thread during this likely generation-defining crisis. The biggest cost of this pandemic is indisputably the human one. Keeping ourselves, our loved ones, and our coworkers healthy while caring for the sick and bereaved is, and should be, our first priority. But while the economic impacts of the crisis may not be the most damaging, they are nonetheless important to mitigate. Doing what we reasonably and safely can to keep people employed and mitigate the economic damage will help prevent second-order suffering down the road. Knowable’s free offer will, Harris hopes, help some businesses better weather the storm, better take care of their employees, and better lift the country back up once we’re through the worst of this.
Like any visionary, Harris sees the upheaval caused by COVID-19 as an opportunity for betterment. “The greatest obstacle most companies have is that they’re fighting inertia,” he told me. “In the short term, it’ll be paralysis and chaos. I think in the medium- to long-term, however, this will open hearts and minds to doing things in a different, smarter, better way… . Freelance working and virtual working are going to be far more accepted” once the world settles into its new normal.
For the founder of one of the legal industry’s biggest Alternative Legal Service Providers, Harris remains surprisingly bullish on the future of law firms themselves. “Law firms take a lot of punishment, particularly in the sort of circles I travel in, but I think the reality is they’re a pretty good business model. They’ve endured pretty well.” Harris also breaks from the convention that firms should continue to consolidate and grow into larger and larger entities. “I think law firms work better as partnerships. I think when partners feel like partners, as opposed to midlevel managers at a multinational corporation, I think they just function better, culturally and from a performance standpoint, from a customer experience standpoint. And I think they control their financial statements in a way that puts them on much better footing and leaves them less vulnerable when the world swings in violently.”
If there’s one thing that resonated for me out of Harris’ open letter and our conversation, it’s a similar theme that has been emerging out of the past few columns I’ve written. COVID-19 is making us realize how what we think of as monolithic businesses and industries are really just a series of connections between people. The contracts that define our conduct are, at heart, a group of people sitting down and agreeing to make each other better off. It’s people deciding to build something together that make up our companies. It’s people that take care of one another in times of crisis.
We are who we surround ourselves with and who we look out for during difficult times.
James Goodnow
James Goodnow is an attorney, commentator, and Above the Law columnist. He is a graduate of Harvard Law School and is the managing partner of NLJ 250 firm Fennemore Craig. He is the co-author of Motivating Millennials, which hit number one on Amazon in the business management new release category. As a practitioner, he and his colleagues created a tech-based plaintiffs’ practice and business model. You can connect with James on Twitter (@JamesGoodnow) or by emailing him at James@JamesGoodnow.com.