Exclusive Interview: Richard Faas, CIO of ARAG & Legal Tech Factory

Corporate Incubator of the Week

Small legal disputes can end up costing you ridiculous amounts of time, money, and effort with no guarantee of a fair outcome. Heinrich Fassbender, the founder of ARAG, built his company based on the belief that everyone should be able to assert their rights, not just those who can afford it. Since 1935, the company has been providing legal protection services to further that core value.   

Today, ARAG is helping people all over the world tackle these challenges head-on with their Legal Tech Studio in the Netherlands. They’re teaming up with some of Europe’s most innovative startups to build solutions that can help you assert your legal rights. 

We sat down with Chief Innovation Officer Richard Faas (CIO), and Head of the Legal Tech Studio at ARAG The Netherlands to get the scoop on how they tackle innovation, their startup portfolio, and his experiences as an intrapreneur.

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Q: Can you tell us a little bit about your background as an intrapreneur?

Richard: Oh, yeah, sure. Well, I was educated in political science and information technology and I started working in market research. Later, I worked for Deloitte and a Dutch financial services company and I got to focus on strategy, business development, and innovation. 

My real start as an intrapreneur was in the space of technology and digital health. I started collaborating with some innovative digital health startups like Happitech and Teamscope. Then ARAG came along. 

Q: Tell us a bit about ARAG. What’s the background, history, and your role?

Richard: If you look at ARAG, we are a worldwide organization. We’re active in 19 countries. We’re based in Germany, and then you have all the branches, and the Netherlands is one of the biggest branches. My responsibilities are in the Netherlands branch. 

The Netherlands branch has about 800 people, many of whom are lawyers and legal advisors. Our business model is built on legal expenses insurance (LEI). We sell our insurance products through business partners and direct channels and try to give as many people access to justice as possible. 

I’m responsible for innovation. Looking for new ways for customers to access legal help.We’re trying to discover new business models, new technologies, and new customer pain points to strengthen our insurance product portfolio.

For example, when it comes to insurance products, you’re paying for something that maybe will happen in the future, and new generations don’t like to pay for something they don’t use. We’re looking for new ways to meet those demands and try to be relevant before, during and after the event.

Q: In your own words, how would you describe Legal Tech Studio?

Richard: Well, we do two things. On the one hand, we try to introduce new digital tools for our existing business. So we have a lot of lawyers. Based on their challenges and based on customer demand, we introduce and experiment with new smart services to work more efficiently.

We don’t build the solutions ourselves, we collaborate with young startups or scale-ups. Once we really understand a problem within the organization we go outside the company and try to scout and select startups that can solve our problem. For example, with Adapting Legal, we’re working together to use decision support in legal processes. 

On the other hand, we try to identify interesting new business models and for that, we use a corporate venture capital model. We’re continuously scouting and selecting promising legal tech startups that match our vision and culture. We start off with a small investment and if our ambitions and goals are achieved, we move forward with follow-up investments to grow together.  

Q: What is your approach to innovation?

Richard: We focus on both horizon 1 and horizon 2 innovation. In horizon 1 we solve real, everyday problems. If you take a look at horizon 2, it’s more about creating new business opportunities. And we do that too. Horizon 3 is more about exploration. 

For horizon 2, we look for new business models and invest in legal tech companies. We say, okay, we are a big company and we have a lot of skills, funds, data, and resources. What we don’t always have is the agility and creativity and entrepreneurial mindset that some of our startups bring to the table. Our aim is to combine our assets to build new successful ventures.

Q: Why should one be bothered with Horizon 2 and Horizon 3 corporate innovation if fewer than 50% of startups fail?

Richard: Corporate-startup collaborations bring us a lot of learning. Investing in 5 years+ scaleups also brings opportunity, but demands another investment thesis.

As a corporate, we gain a lot of value by learning together with the startup. Investing in early-stage makes growing together possible, with the added perk that we do not take high financial risks at this stage. Even when startups fail, we hope to still acquire some valuable talent. 

In the end, as a big corporate we don’t only do early-stage investments. We acquire companies, but also build our own corporate ventures. I believe that horizons 1,2, and 3 can strengthen each other. For example, one of our portfolio startups builds decision trees, and we use this solution within our corporate ventures and corporate organization to improve customer journeys.

Q: What was the biggest challenge getting Legal Tech Studio off the ground?

Richard: We made it a priority to start with horizon 1. So we worked on finding innovative solutions to real everyday problems. We worked with different people within the company to solve some of their everyday challenges. That was a really important step for us. After about a year and a half, we built some trust and saw great results. Then we were able to tackle some of the longer-term projects. 

For example, we introduced legal chatbot technology, and live chats for the service center, just to do their work more efficiently and offer a new service channel for our customers. Sometimes there is a bit of resistance to change. People are involved in their daily work and they don’t really have time to experiment and try new things. 

So when something doesn’t work immediately, people will go back to their normal routines. In such cases, it is our job to keep working with the team and keep the ball rolling.

Q: What kind of corporate support does Legal Tech Studio offer its startups?

Richard: When we find a startup, we say okay, we would like to collaborate with you guys because we believe in your team and solution and we offer a one year program. 

Our head of ventures makes a plan with the team to grow the startup. We also have a designer, a growth hacker, and a coach. Additionally, we use our network. So we open up our network and help our startups forge interesting partnerships. This will help with sales, but we also work on product, marketing, and team development 

We also work together with our startups to help them get ready for their next investment round. We have an investor network and we introduce them and help them find new sources of finance. 

Q. How is the “success” of your startups measured? Are there any particular projects you are extra proud of?

Richard: We have a whole portfolio of startups right now. Appjection for example is very interesting. What they do is they make it possible for you to contest your parking fine or speeding ticket quickly and simply.

You can make a picture of your fine, find out if there are fair grounds for it and if not, an automatic letter of objection goes to the court of justice. The nicest part is that in the Netherlands when you as a consumer get an unfair traffic ticket you don’t have to pay for the objection. 

We have another young startup called “Appeal”. Dutch real estate agents, ask money from both tenants and landlords. Judges in the Netherlands don’t think it’s ethical to get money from both sides. Appeal gets money back from these real estate agents. In March there was a new verdict from a judge saying that Airbnb is also doing this. 

So in one day, Appeal created a landing page for Airbnb clients and in approximately three months they acquired almost 20.000 new customers.

Q: How is the “success” of Legal Tech Studio measured by ARAG? What kind of KPI’s do you look at?

Richard: Our success is being measured in different ways. When we introduce new technology within our organization it is about efficiency, Employee satisfaction, and customer satisfaction.  

Our investment portfolio, on the other hand, is driven by strategic and financial indicators. Is this company still growing and developing as promised? Is their financial value still increasing? But, we also learn new ways of working, new customer journey, new customer demand, new technologies, and new ways of providing access to justice.

That’s why we have a diverse portfolio. Every year we want to do six investments. So in five years, we’ll have a portfolio of 30 validated new business models.

Q: Can you tell us a bit about your team?

Richard: We have a small team existing out of a design lead, head of ventures, growth hacker, and innovation manager. Furthermore, we have strong collaborations with several Dutch universities and always have 2 or 3 intern on the team. For the other skills we need, we build an extended network of resources around the core team.

Wendy Persoon

Design Lead

Douwe Wester

Head of Growth

Sandra v/d Pal

Operational Lead

Richard Faas

Chief Innovation Officer

Alexander Rinne

Growth Hacker

Q: What advice would you give intrapreneurs looking to take on similar projects?

Richard: Try to find out what kind of innovation (horizons 1, 2, or 3) will best fit your organization, then build your team around it to get started.

The portfolio.

Here are just some of the awesome startups in the Legal Tech Studio’s portfolio:

Regulatory Lab: This legal compliance software helps ensure that notaries and law firms comply with anti-terror and money laundering laws. 

Appjection: This automated decision-making software makes paying unfair traffic fines a thing of the past. It uses AI to verify if your ticket is warranted. If it isn’t, you get a full refund!

Adapting Legal: Avoid paying expensive legal fees for repetitive processes. The Adapting Legal software helps legal or financial services companies automatically generate legal documents, start processes and manage workflows.

Appeal: Appeal helps disadvantaged tenants make their rightful claims using scraping software and automated document generation.

Zynyo: Zynyo offers clients a faster, more efficient, cheaper and safer way solution for digital signing. It’s a complete paperless process that follows the strictest requirements of GDPR.

JanisID: JanusID offers state-of-the-art identity services and fast, accurate, and secure identity checks.

Final thoughts.

The Legal Tech Studio is still going strong in its mission to create innovative solutions that help people assert their rights. Some of their current areas of interest include:

  • Online legal services
  • Privacy and GDPR
  • Online Dispute Resolution
  • Online claims
  • Document Assembly
  • Litigation funding

If you have a promising startup idea in any of these areas, check out ARAG’s Legal Tech Studio, and apply! With such interesting projects on the horizon, we can’t wait to see what they’ll come up with next.

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Ritza Suazo

Ritza Suazo

Innovation Journalist