Hi @Latela! Back in April, I promised to answer questions, and you took the opportunity. Thank you for that! My response comes with a couple of months’ delay, but on the other hand, we now have the Q3 figures included as well. At the same time, I’ll address a few other questions raised on the forum.
Country Growth Figures and Eliminations
Starting in Q3, we allocate intra-group eliminations to the respective countries, meaning each country’s growth figure now reflects only external clients. Under the old calculation method, Sweden’s Q3 growth would have been about 4 percentage points higher and Finland’s about 1.5–2 percentage points higher than reported, while the Baltics would have been correspondingly lower. So, Finland wasn’t at zero; it grew by well over 5%. The growth in cross-border work is a “happy problem” for me: the more eliminations, the better.
Sweden
In June, @TTTT and @Farseer were looking for actions rather than words. Sweden grew by 20.6% in Q3. The turnaround began when Victoria Swedjemark started as Country Manager in March (and I stepped down as interim…). Growth comes from three sources: existing clients are buying more, LDaaS deals from early in the year are now reflected in revenue, and we also gained new clients in Q3. The Swedish market is 2.5–3 times the size of Finland’s, so we are emphasizing growth there and hiring ahead of the curve. We aren’t declaring victory just yet, but fortunately, the direction has turned.
Why Keep Pushing LDaaS?
The pig analogy was a good one, even though I slightly disagree with it. Clients using Legal Department as a Service (LDaaS) and other recurring services generated 62% (67) of our revenue in H1 when including their individual project assignments. Thus, LDaaS isn’t just a side project alongside the “real money-making.” It is a client base that also generates a significant portion of our separate assignments.
To be completely honest, recurring services revenue declined by 11% in H1, accounting for 41% (46) of total revenue. That trend was heading in the wrong direction. My interpretation is that recurring services are lagging indicators: clients cut recurring costs first and reinstate them last. We track four leading indicators: new sales, expansion in existing accounts, down-scoping, and churn. In Q3, all four moved in the right direction. We will publish the next set of figures alongside the financial statements.
We do not report profitability by service line. We deliberately price recurring services more affordably than the project-based market, with value generated through long-term client relationships. To @TTTT’s concern about people becoming complacent, my response is this: a recurring service must not mean sitting around waiting, which is why the amount of client work per lawyer is now managed more rigorously than before.
Why Is Profitability Lower Than Peers?
@Uppo-Nalle wrote about this better than I could: law firm margins include partner compensation, so the figures are not directly comparable. However, I don’t want to hide behind that. The revenue per lawyer metric in Talouselämä’s business law survey shows that we are clearly more affordable than the traditional market. Part of that is by design; part is inefficiency.
The biggest lever is simple. Every additional minute of client work per lawyer, every working day, translates to approximately 100,000 euros in revenue and nearly the same amount in EBITDA. Workdays don’t need to be lengthened if we eliminate waste. That’s why we’re doing exactly what you suggested: targets are clearer, and we track them more closely. Internally, we talk about the journey from a “High Care” organization to a “High Care, High Performance” organization. In Q3, adjusted EBITDA was 8.9% (6.6), and the Rule of 20 score for the quarter was 17. The direction is right, but you are correct in that more can (and should) be expected of us.
Perception in the Eyes of Clients and Employees
The client NPS we published in the Q3 report rose to 82 (68), with a significantly larger sample size than before. Employee eNPS dropped to 14 (17), which is nothing to be proud of. Part of this is explained by the cultural shift and new systems, but the next eNPS score needs to turn back upward. Why doesn’t a great customer experience translate into more money? As a young lawyer, I heard an experienced attorney say that clients complain far too little about our invoices. The same applies to us.
Legora and AI
Legora is our lawyers’ primary tool, and we track daily how actively it is used. Legora does not cannibalize LDaaS, but AI is reshaping the work done through the legal department service. We handle fewer low-value routine tasks than before. Some inquiries, for example in employment law, have already shifted to the client’s internal AI. Elsewhere, new demand is emerging: the volume of AI-generated documentation is increasing, and someone has to take responsibility for it. That someone is often the company’s in-house counsel, who needs more support than ever. The focus is therefore shifting away from routines toward areas where a lawyer’s judgment and accountability are genuinely required.
Last spring, @TZ1 asked why law firms don’t open up their data to client AI systems. Good question. Everyone has access to the same language models, so the deciding factor is context. In an ongoing client relationship, that context accumulates over years. AI assistants can be built on top of that—initially to support our lawyers, and later, directly for the client.
Juniors or Seniors?
We don’t report the breakdown of our recruitment, but the principle is clear: if you stop hiring juniors, in ten years you won’t have any seniors either. The junior lawyer’s role is evolving. There’s less digging through archives, and they get involved in client work earlier.
Latela promised to keep pestering us with stupid questions. I hope others do the same. There are no stupid questions, and good questions keep us on our toes. I also promise that the next response won’t take two months. The bar is set so low now that I’m sure to clear it. 