Wednesday, July 11, 2012

Demands of the New Legal Services Market

The Legal Services Act for some was expected to unleash a torrent of change, dynamic new legal ventures pouring into the market once alternative business structures had been sanctioned. The reality is different. We are seeing gradual change and not all of it as a result of the LSA.

I think of the LSA as a facilitator, a change agent, rather than forcing change. A number of examples come to mind. Axiom Law, Riverview Law, Kennedy Cater, Lawyers on Demand are all new ventures that didn't need the LSA to come into existence. What they took was inspired imagination on the part of their founders as a result of profound dissatisfaction with the status quo.

There are interesting differences between these ventures that signify how problems are approached and resolved. Axiom set itself up as a way of taking lawyers out of the typical law firm track and employing them to join in house law departments as temporary staff. Axiom has moved on and taken on more work in relation to legal process outsourcing.

Riverview took the simple step of having its solicitors and barristers charge a fixed price for what they do. It relies on using the principle of direct access and networks of barristers who are prepared to commit to the brand. Riverview is moving fast, having recently opened up a New York office.

Kennedy Cater analysed the problem of legal procurement from the perspective of clients and brokers legal expertise for clients.

Lawyers on Demand was based on the idea that large law firm services are often too expensive for clients who don't always need the bells and whistles that come with corporate legal services. So Simon Harper, a TMT partner in Berwin Leighton Paisner, created Lawyers on Demand (LoD). Clients could take lawyers in house for however long they needed them. As Jordan Furlong says, LoD is "a dispersed law firm."

And this idea of dispersal or distribution is at the heart of it. Simon Harper attributes it to the management of risk, that is who is to manage the risk. In the typical lawyer-client relationship between law firm and corporate client, the client in effect asks the law firm to assume and manage the risk in the relationship and the work. The law firm takes on the issue, assigns the personnel, and hands back the solution. It is expensive, bespoke, and highly effective. Given that London associates are being billed out at £300+ an hour, it's understandable why clients are cautious now about legal spend and costs, especially in the age of austerity.

The LoD model transfers the risk from the law firm back to the client with consequent savings. The client has a problem that can be dealt with by having a lawyer with the appropriate expertise work on the issue for however long it takes in house. It is cheaper, the client monitors the work, the lawyer's time and ultimately the cost. The client manages the risk of the relationship rather than the firm.

Contrary to Axiom's approach, LoD does not hire the lawyers; instead it empanels them by keeping them freelance and arranging the work. In effect, LoD's lawyers are not exclusively tied to LoD. They can work elsewhere without severing ties with LoD. Dispersal and distribution are motifs that run throughout the organization.

It's not difficult to see the attractions of the model from the lawyers' perspective and that of LoD. And there are benefits for clients. Yet it appears as if BLP created its own monster to compete with itself. One can imagine issues around conflicts, cross-selling in/to the firm and so on.

Lawyers on Demand has been going since 2007 and gathered a notable list of clients, eg, the Financial Times, Cisco, Orange. But there are limits to the current constitution and LoD has now gone independent from BLP. Having been spun out it has not exactly been spun off in that BLP is the largest stakeholder and there is sharing of technologies and some services.

So Lawyers on Demand has matured and become an entity in its own right. But more than this LoD is emblematic of a drive in legal services to create ways of delivering service and professionalism to clients which are transparent and simple. It takes law out of the black box and sheds light.

In part the success of conventional law practice has been lure of information asymmetry: "We know what you need better than you do." Whereas professions are supposed to put their clients' interests first, over the years that has faded. New ventures liberated by the Legal Services Act are creating businesses that embody professionalism yet are run profitably and responsibly.

More of this approach could put Tony--in the picture above--out of business.



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