Are virtual firms a silver lining to the pandemic?
Every metaphorical cloud has a virtual silver-lining.
The coronavirus pandemic has been and remains a personal and global calamity. Lives and jobs lost, livelihoods and plans ruined.
It has also forced corporations to re-consider their inferior and outdated business approaches, which is paving the way for the legal consultant business model.
“Ok. But what is the legal consultant business model?” I hear you say.
There are several versions:
- Consulting pools run by the large firms. These are not really virtual firms, but big firms like to claim they are. A flexible way to ’employ’ lawyers to fill gaps when needed. Think Pinsent Masons Vario.
- Proper virtual firms. Law firms provide lawyers with a digital identity, regulatory and insurance umbrella. This identity is packaged through a brand, platform, and a management system. This way, lawyers can serve as self-employed consultants. In turn, the firms take around 30% off the earnings made by lawyers. Think Keystone or my boss’s alma mater, Carbon Law Partners.
- Networks of small firms and sole practitioners. A central platform provides introductions, referrals, networking services, events to its members and clients but firms maintain their own personality and independence. Adviserly is the first of its kind, charging a combination of subscription and commissions. Because it is not a regulated entity, it can have a much wider reach across different countries.
So much for saying “a symbiotic relationship will never work” Spiderman. A sneaky reference to our Marvel fans out there who know about the creation of the character called Venom.
Based off reports made by Arden Partners plc it is expected that a third of all UK lawyers could be working under a consultancy model by 2026.
But is this all a good idea? And which model will triumph?
The consultancy business model and low/mid-market law firms
Yes! If done right, it is a fantastic idea for low to mid-market law firms, but also for the larger firms as well.
Many firms appear to be hesitant when it comes to updating and incorporating new technologies.
In today’s day and age, they should know this perspective is a big no no!
Not naming any names, but just go have a look at the office equipment and website layouts of some top tier law firms. They will have you questioning what time period you are in.
Anyway, this issue doesn’t matter as much anymore thanks to the pandemic. Those sceptical law firms are now forced to take a “leap of faith” and invest in a stronger IT infrastructure. This means that money spent on office costs can now be saved and redistributed if needed.
Firms in the second catagory listed above have thrived since deciding to adopt the legal consultant business model. Arden Partners have also explained that thanks to these firms, the consultancy business model “will become the dominant model for high street and mid-market law firms, stimulated by the success of remote working during the pandemic”.
But magic and silver circle law firms as well as the Big Four and large accounting networks are also moving in this direction, leading to a blurring of categories one and two.
Virtual firms and brick-and-mortar firms will become harder to distinguish. Independent consultants will start to face many of the same pressures of their desk-bound colleagues, with less employment protection.
Networked virtual firms and the future
The true innovation is in the third category – where Adviserly is, obviously – networks of small independent firms serving small businesses and digital nomads who love the personal service of smaller firms.
Since we’re going all futuristic it would be useful to consider the extent to which lawyers should become digital nomads themselves.
When I say digital nomad lawyers, I don’t mean it in the sense that you’re in a courtroom and your lawyer is representing you on a 13” laptop screen through Skype whilst drinking a cocktail in Hawaii.
What I do mean is that perhaps lawyers should be allowed to hold client meetings and conduct certain matters virtually. For example, virtual calendars can allocate times for clients, removing the commute and freeing up significant time. Lawyers are able to slot in a larger number of clients and be more comfortably organised, while being much more convenient for most clients.
Crucially, networked independent firms can design their brand and priorities around their own values, which can therefore align more closely with their clients’ values.
A silver lining or a double-edged sword?
John Llewellyn-Lloyd, the head of business services for Arden stated, “With a significant unrealised market opportunity, an ever-increasing market […] it is easy to see why the consultancy model makes such a strong investment case for public and private investors.”
At Adviserly, we are believers in the power of networks, the digital nomad lifestyle and the concept of remote working.
If more law and accounting firms adopt the consultancy model, it’s a game changer.
Done well, focussing on the individuality and personality of clients and advisers, and the world will be a better place.
If done badly, it will result in poorer service for clients and ever more stress for lawyers and accountants.
Every virtual silver lining has a metaphorical cloud, after all.