Level 2 Legal Solutions, which calls itself a legal services company, today announced the formation of new Compliance and Privacy Practice Areas. These practice areas, according to Level 2 Legal, are specifically geared towards corporate counsel and law firm needs.

That in and of itself might not necesarily sound like big news, especially since Level 2 Legal has been in this space for a while. But what Level 2 Legal is doing is, in fact, a good lesson in disruption, innovation, and how to compete in today’s changing legal marketplace.

Level 2 Legal started about 11 years ago as an eDiscovery service provider. Along the way, it discovered that the knowledge it gained in ediscovery enabled it to develop expertise in other areas. Areas such as helping clients with compliance, privacy, and investigations. These service areas, says Level 2 Legal, have informally grown from 66% to 298% over the past three years. By formerly launching the Practice Areas, Level 2 Legal hopes to make its compliance and data analytics expertise more broadly available to clients. This offering is especially relevant today as new complex legal issues, such as those presented by CCPA and GDPR, are bedeviling corporate counsel.

Compliance requires not only determining where documents are but also engagement with individual custodians.

As I pointed out in a recent post, one of my former partners was fond of saying always try to become knowledgeable and get control of your client’s documents. It will make you indispensable. By that, he meant you would get such great insights into your client’s problems and business that you will be in a unique position to provide advice. Level2Legal knows this too.

Joey Seeber, CEO of Level 2 Legal, sees the new privacy and compliance tools will enable just that. Compliance, according to Seeber, requires not only determining where documents are but also engagement with individual custodians. Just the things my partner and I used to do to get control of the documents in litigation. Just the sort you thing that will ingrain Level 2 Legal in its clients’ business and enable it to provide sound legal and business advice. And by offering compliance and privacy services, Level 2 Legal will do this apart from litigation. If and when litigation occurs, Level 2 Legal will be the trusted advisor the client turns to manage the document ediscovery phase. Seeber says he hopes to use this kind of approach to compete with the Big 4 and, although he didn’t say it, other ALSPs and law firms.

But more than that, from providing this kind of value add, its only a small step toward becoming even more ingrained in the client’s business. Since most in house counsel today want legal advisors to understand the business issues, that’s a pretty important goal. Seeber told me recently that his vision is not just to be a discovery provider but to be an advisor to corporate clients. As Seeber puts it in the Level 2 Legal press release, “Our clients turn to us because we understand the big picture. The varied backgrounds of our attorneys – from engineering to behavioral science to philosophy – give us a unique perspective and enhances our legal expertise. The formal creation of compliance and privacy practice areas is another example of Level 2 Legal doing more of what we do best: delighting our clients.”

What business are you in?

Ted Levitt, the famous Harvard economist, pioneered the concept that businesses should stop defining themselves by what they produce. Instead, they need to reorient themselves toward customer needs. He challenged businesses to ask questions. Questions like what business are you in?

Levitt demonstrated the value of this question at the time by pointing to the railroad industry. Railroads did not stop growing because the need for passenger and freight transportation declined. It actually grew. Levitt believed the railroad business shrunk not because the growing demand was filled by others (cars, trucks, airplanes, and even telephones) but because it was not supplied by the railroads themselves. Railroads let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation industry. They failed to recognize the diverse needs of their customers. (Levitt is also well known for the observation: “People don’t want a quarter inch drill, they want a quarter inch hole”).

In each case, disrupters challenged the existing players because they defined their business in such a way that they could be more flexible and nimble

The proof of Levitt’s concept and the relevance of his question is even more evident today. Think of Uber and taxi cab companies. Airbnb and hotel chains. Blackberry and the iPhone. In each case, existing industries were disrupted because they were product-oriented rather than customer orientated. In each case, disrupters challenged the existing players because they defined their business in such a way that they could be more flexible and nimble. By so doing, they were able to meet the diverse, intimate, and specific needs of their customers. The result, railroads were left to the lowest common denominator: hauling massive quantities of goods.

That’s the exciting thing about companies like Level 2 Legal. Seeber and his team are customer-oriented. They have asked and looked hard at what business they are in. And they hope to have found a way to supply a need their competitors were not efficiently and effectively providing.

Oh, one more thing: they see their competition not as ediscovery providers but as other ALSPs like the Big Four and even more fundamentally, law firms.