Chris Bull, founding director of the Intuity Alliance and director of Kingsmead Square, considers the structure, funding and skills needed for a legal service business in the digital age.
This article was featured in Legal Business.
Note I’m talking about ‘legal service business’, not ‘law firm’. ‘Law firm’ suggests a partnership – too outdated and narrow a term in an era when very few new partnerships are being created, and existing firms are converting to corporate structures.
There are also many new legal businesses that would resist any association with the ‘law firm’ tag – preferring LegalTech, Alternative Legal Services (ALS), Legal Process Outsourcing and other badges of NewLaw honour.
When we talk about anatomy, we use it is as an umbrella term to capture operating model, business entity, ownership, organisation design, regulation and governance.
A new anatomy is emerging as legal businesses work through a series of questions, often challenging the conventional wisdom of how a legal business should look, whether they are a start-up with a blank sheet of paper or a 200-year old firm of solicitors.
Being a law firm has long held great cachet and been a stamp of quality. But, in recent years, LegalTech, ALS and NewLaw have been proudly used to positively signify the exact, polar opposite to conservative law firms.
By 2030, we suggest that few people will care whether a legal business started life as an 18th century firm of solicitors or a 2018-vintage legal tech start-up.
The differentiators will be the products and services that are delivered – from the very niche to full multi-disciplinary (embracing accounting, tax and consulting); the specialist sectors served, and the client service model.
Legal service businesses must also consider funding and whether to restrict this to internal capital contributions or seek external investment.
Investments have been building slowly since external ownership of firms was opened-up in 2011, and the burgeoning legal tech market is simultaneously becoming one of the hottest properties for capital.
Not only are standalone legal tech ‘unicorns’ attracting substantial investment, but trailblazing law firms are developing legal tech ventures to create real value for their parent firms.
Meantime, we have seen multiple flotations, including Gateley, Rosenblatt and Gordon Dadds, with top 20 firm DWF next. The purpose, including the paramount need to fund technology investment, and source of funding is now a big question for every firm, but it is becoming a tactical, not an existential decision.
A successful legal services business needs new skills and new C-suite roles. The corporate governance model that separates an executive C-suite from a non-executive, elected Board – increasingly with independent Non-Executive Directors – is becoming the default approach. New leadership roles are being created in innovation, pricing, resourcing, digital, data and General Counsel.
Taking our cue from the likes of EY, we should not be surprised if the number of tech and digital hires soon outstrips the lawyers.