Written by: Adrian Jaggard, CEO of Taylor Rose
Despite the innovations in key sectors like technology, healthcare and financial services over the last decade, the legal industry has struggled to keep up with the pace of change.
The stalled evolution of the legal services industry might be attributed to its current leadership, mostly traditional partners that trained in more lucrative and bygone times, now frustrated by the dissipation of a model that once was. Many are disinclined to invest, or possibly hand-tied by cashflow, at a time when investment is needed more than ever to achieve scale and modernise.
Traditional firms who have under-invested in back-office infrastructure found themselves under heightened pressure in Covid – partially due to the sudden need to invest in IT infrastructure, but also because of building pressures from more stringent regulation, higher insurance costs, and wage inflation. Fortunately, plentiful Government subsidies covered the cracks of declining balance sheets that are only now coming home to roost.
Covid exposed the outdated business models of many law firms, and a highly fragmented market which is ripe for consolidation. Right now, most managers are still figuring out how to measure and monitor productivity beyond hours recorded by their fee-earners and billing. Most recognize that it is time to abandon time as a measure of productivity but are yet to let go for lack of more sophisticated alternatives.
In this environment, legal services firms must adapt and innovate. They can do this in a number of ways.
Some are starting to grow revenues by cross-selling new services (legal and non-legal) to existing clients, which enhances their ability to improve margins. But to do this, they need dedicated structure and strategic deals with other professional services firms. However, lack of time, confidence and available capital are barriers to what many perceive as a risky deviation from a tested (but troubled) business model.
Others have chosen to follow new business models altogether. One of these is the legal consultancy model, which according to a report published last year by Arden Partners, will become the dominant model for the consolidation of high-street and mid-market law firms. Industry insight from Arden this year has also shown that legal services firms operating a consultancy model are growing at three times the rate of mid-market law firms as a whole and would be much more investable due to their ability to easily integrate multiple lawyers from small firms. Arden cites the consolidation opportunity provided by a highly fragmented market, the sophisticated IT infrastructure and practice management systems in place and the ability to use their platforms to scale more quickly by integrating additional professional services.
Since founding Taylor Rose law firm in 2009, a key factor behind our rise to a top 60 law firm with revenues of around £70m last year has been the fast growth of our legal consultant division. This connects legal work from major brands with individual consultants – who operate under the Taylor Rose MW brand and in association with the company – who often wouldn’t be able to win the work independently. Creating hundreds of legal entrepreneurs, our consultancy division has been one of the key drivers in our expansion, offering lawyers a central service platform, brand and management infrastructure from which to operate in return for a percentage of the lawyer’s revenue. Taylor Rose MW currently has over 450 consultant lawyers.
This is just one example. Taylor Rose MW’s holding company, recently rebranded to AIIC Group, also incorporates the brands of FDR Law, Sloth Move and Kingsley Wood, and we are aiming to reshape the future of legal services with a combination of scalability and innovation.
We focus heavily on technology and have invested heavily in scalable IT and management systems to bring together technology-enabled consumer legal services across various parts of the legal ecosystem.
But we are also very clear that we need to look beyond the legal realm in search of inspiration. There is so much to be learnt from other industries, and through analysing the success of companies across different industries, such as the user-friendly services of John Lewis and operating models like Amazon, which has created a marketplace for millions of businesses to trade on under the company’s banner, we have looked at how we can improve our ability to innovate, scale and succeed.
As the economy faces challenges in an ever-changing market, all industries must ensure they are equipped to evolve. While some law firms have historically appeared distant from the terms “creativity” and “innovation”, the legal services sector continues to undergo a paradigm shift and creating space for evolution and offering smart and forward-thinking ideas will be vital in the future of the industry.