We are a few months on from new
Standards and Regulations
that the Solicitors Regulation Authority launched on 25 November. To recap, these replaced the old SRA Handbook with fewer principles; separate Codes of Conduct for individual solicitors and authorised firms; and shorter and more flexible rules. Perhaps the key aspects of change were that solicitors were enabled to deliver legal services to the public from within businesses that are not regulated by the SRA. What impact has there been?
As Zhou Enlai probably didn’t say about the impact of the French Revolution 200 years on, ‘it’s too early to tell’. With most revolutions the starting point is less clear, more gradual and the period of change longer than it sometimes seems. What we do know is that most of the legal market is already served to some degree by unregulated firms employing solicitors. But it is interesting that many of them were doing so before the new STARs – as the rules already allowed. These are all unregulated law firms (whatever that quite means) and between them their range of services is pretty broad:
LOD Legal,
Hybrid Legal,
Aria Grace,
Peninsula,
Rocket Lawyer,
Which?
and
Law Centres.
It is interesting that many are not new. We have had solicitors delivering through certain types of unregulated legal businesses for many years but now it is available more openly. Where there were gaps we are already seeing them filled - there was certainly some pent up demand for this new model. One aspect worth dwelling on with these types of business is that they are often built upon flexible lawyering.
Many law firms and legal businesses tell me about the challenge of attracting and retaining talent. We are living in a period of high labour market participation, high employment and low unemployment, and a significant 60 year growth in professional services. There are more and more recruiters looking for talent. It is a truly competitive labour market among professional services.
Along side this we see increased demand for flexibility. There might be a range of reasons for that - labour is powerful and can demand better conditions as well as pay; rising prosperity among professionals may mean that they can afford to work less, and
assortive mating might amplify that; and, improved rights for parents and others such as part time working may impact. The gig economy may be less insecure for professionals than drivers and that may mean it is more widely embraced rather than tolerated.
There are other models that go beyond those mentioned above. As I often remind people,
Axiom
is over 20 years old and there are many other firms – regulated and unregulated; new entrant and partnership model law firm - that are using flexible legal resource to build new products and services to meet client demand. Mainly these businesses have sought to recruit lawyers from private practice - usually those that are post ten year qualified. They provide a route to a more sustainable career for some lawyers and in a future blog I will return to this.
What is also interesting is the emergence of a model of flexible lawyering for in-house lawyers. Remembering that there are more that 30,000 in house solicitors in England & Wales and this seems like a great talent pool to tap into. What might that allow a business to offer that is different? The most significant example I have seen is
The Legal Director.
They offer outsourced or contracted Legal Directors or GCs to small and growing businesses. Their clients are interesting in that they are themselves often growing businesses. That might make them very cost conscious, and perhaps that is why they want flexible resource. It is often the model of new businesses anyway so they may expect it from professional advisers. The Legal Director says on its web site that they “match one of our lawyers to your business needs and he/she then performs as a member of your senior management team, just like an in-house lawyer or legal counsel.” I wonder just how attractive that suddenly seems to small businesses facing unprecedented legal issues arising from the current corona virus crisis our society and economy is facing, where small businesses are at one of the sharper ends of economic impacts.
Flexible lawyering is moving into the in-house world for small business rather than simply being a flexible resource for the General Counsel of major companies. A model like this could be built that is unregulated: the solicitor is ‘lent’ into the firm where s/he then works only for her ‘employer’ even undertaking reserved activities. But for more cautious companies there may be benefit in not taking on those supervisory and risk responsibilities. They have the comfort of knowing that a regulated law firm (which The Legal Director is) stands behind the individual as well as having them embedded in their senior management team. Is it the best of both worlds for some types of client? Does the challenge we now face of several months of working from home make this even more central to small and growing businesses?
This may not simply be about taking legal work away from traditional law firms. Small businesses in particular are notorious for avoiding solicitors – often because they fear cost and dispute escalation alongside relationship damage. Does a different type of offer help tackle those issues? May it even be a way of growing the legal market for other types of flexible lawyering and even for traditional law firms – as the client builds confidence in the legal supply chain? Might we see business that steer away from legal advice using experienced in-house lawyers via a platform like that offered by The Legal Director?
While it is too early to test the impact of SRA changes we can see signs of change – evolution or revolution, it is change that matters. Whether as an unregulated under the STARs, or a new flexible lawyering model for in house lawyers, the chances are that liberalisation is growing the market. That really is good for solicitors, legal businesses, and most importantly for clients. Especially right now.
