New entrants to the legal services market are hugely excited at the prospects, but can established practices respond? We report on one of the major themes of the “Leading Legal Excellence” conference

We are used to hearing warnings of the pace of change in the legal market, and of the competitive threat posed by new entrants with lean, fit business models. But it is when you listen to one of the driving figures behind this new breed of legal service providers that you realise just how eagerly they view the opportunities awaiting them.

That was the unmistakable message from Karl Chapman, chief executive of Riverview Law and a keynote speaker at the Society’s major conference Law in Scotland: Leading Legal Excellence. Readers of last month’s preview feature may recall how this, his third start-up venture, was born out of customers of his AdviserPlus HR consultancy asking for legal services in addition, and how his turnover has come close to doubling in each of the four years he has been trading so far. At conference he warned us that he tended to speak faster as he got excited, and by his conclusion he could have been commentating on the finish of the Grand National.

“I have never been more excited in my life than at this opportunity,” he declared. Legal services was “probably one of the most exciting markets or sectors to be in”; it is “so far behind every other sector of the economy”; he and his team “were like kids in a sweetshop” when they started looking at the opportunities.

A form of madness?

What did he and his colleagues see as they planned their launch? A big market, but a fragmented one, with customers looking for change; an “unsustainable existing market structure” that is no longer protected and has labour oversupply (making recruitment easy); high margins at the top end with PEP figures that do not go down well with customers (a term, reflecting his service ethos, that he prefers to “clients”); these same customers driving change; and IT providers exploring how they can redesign the market. Notably, Riverview Law has just bought a US tech business to underpin its carefully chosen label of “A tech-led business with deep legal domain expertise”.

Chapman described as “madness” the fact that corporate general counsel are expanding their in-house teams because it is cheaper than using external law firms. “What supply chain creates a situation where it’s cheaper for the customer to do it themselves?” he demanded, adding that it is very difficult for a new entrant not to come in and deliver something as good but at lower cost.

Asked from the floor why he was encouraging competition, or “are you just rubbing people’s noses in it?”, Chapman replied that the liberalisation of the UK market has given the profession here a huge opportunity globally. “I’d be happy with 10% of that $450 billion market!” he declared.

Oh, and if this is to be taken seriously, Riverview’s strategy is that he “should be fired if in three to four years we are recruiting senior lawyers”. Because they are investing heavily in training their own.

Grab your share

Some idea of what to expect from Chapman’s address was provided in the breakout session led by Mike Polson, head of Ashurst’s Glasgow operation that handles work outsourced from its client-facing centres elsewhere. He pointed out that despite some “knee-jerk” statements to the contrary, the market is growing, and in “non-traditional” legal services has positively rocketed globally, from $640 million in 2011 to $41 billion in 2014 – of which the biggest firm in the world has only a 0.6% share.

Polson agreed that this makes it easier for new entrants, as does the fact that “95% of what we do as lawyers does not involve giving legal advice”. Getting over the traditional model of lawyers doing it all, he added, does not mean taking jobs out of law firms but changing what people do, especially given the IT tools now available – the spellchecker, for example, has been superseded by document proofing tools that can check for definitions and the accuracy of cross references, while not eliminating the need for a human read-through.

Like Chapman, Polson’s message for lawyers in more traditional businesses was ultimately an upbeat one. “Be positive about change,” he declared. Encourage people to get out of their comfort zone, and think of what it would mean in terms of grabbing a share of the new market. There is no single winning business model; the one thing they all share is change.

Taking a closer look at Ashurst’s Glasgow operation, Polson told us that two years after opening, with a capacity of 280 in their building, they are now looking to take extra space. It deals with “lower value work at the high value end”, such as support for a £1.6 billion auditor negligence case. With about 46 “product lines” and 104 workstreams, it has worked for 16 Ashurst offices across the globe. Its legal analysts develop transferable skills that enable them to move, say, from corporate to due diligence to real estate work, week by week – he regards the label paralegal as “a term of the past” because it pigeonholes people to work in a particular area.

Asked how he expected the traditional boundaries between the professions to change, Polson predicted more convergence as each extended their service offerings – but suggested that lawyers might have an advantage as those making the buying decisions are often lawyers.

Process: for smaller firms too

Where does the smaller practice fit into all this? A focus was offered by Jon Whittle of LexisNexis in another breakout session, based on their 2015 “Bellwether Report” – independent research conducted among practices excluding City of London and global firms.

There is a well reported statistic that the percentage of lawyers who believe they provide above average service is about twice the percentage of clients who think they get it. The Bellwether research reflects this, along with client comments indicating how in today’s world they like to look into things for themselves and remain in control of the process. (Compare Karl Chapman’s belief that the underlying changes in the market can be dated to the start of the internet era.)

Furthermore, what clients – and Whittle urges us to think of them as customers – really want, and what lawyers think they want, don’t always coincide. Top of the rankings for clients come (1) a clear idea of costs; (2) regular updates (only at 10 in lawyers’ estimation); (3) the charging system being explained at the start; (4) understanding of their needs and expectations when the lawyer takes on their case; (5) personal response to phone calls and emails within 24 hours; (6) being good at listening (only at 12 in lawyers’ estimation); (7) keeping to the timetable; and (8) making the law understandable – which lawyers put up at number 4.

Whittle’s anatomy of a “smart firm” and its priorities for improvement included:

  • smart servicing, starting from the customer’s perspective (why did they come to you?);
  • smart support, investing in services that help you provide the best law;
  • smart thinking, you have to keep moving, and fast, as there is no room for a “steady as she goes” strategy;
  • smart processes, being as IT-savvy as your millennial clients and working in the way they do.

What holds some firms back, he suggested, is a reluctance to change their processes – the “If it ain’t broke” way of thinking. But if your processes are not up-to-date, the clients won’t stay.

Whittle is not alone in calling for a more proactive look at process. Michelle Hynes’s article this month (see p 48) is to the same effect; and Stephen Gold, who chaired Mike Polson’s session, argued that separating out process work “is for everyone”. Writer and analyst Rasmus Ankersen, the final keynote speaker, went further: “If it ain’t broke, consider breaking it,” he proposed. “If you were sacked tomorrow, and someone else got your job, what do you think they would do? It’s a good question to ask once in a while.”

Hopefully, solicitors are receptive to these messages, starting with those who attended the conference. Winding up the day, the Society’s chief executive Lorna Jack said she had been struck by “how open to change our members actually are and how willing to embrace what we discussed today”.

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