The legal consultant business model will become the dominant model among high street and mid-market law firms, with around a third of UK lawyers predicted to be working under such a model in five years’ time.
The Covid-19 pandemic has acted as a “catalyst” for industry disruption, exposing the “poor management and outdated operating models of many law firms,” according to mid-market investment bank Arden.
Arden believes the consultant business model, operated by the likes of Keystone Law, Gunnercooke and Taylor Rose, will become the dominant model for high street and mid-market law firms, stimulated by the success of remote working during the pandemic.
It estimated that a third of all UK lawyers could be working under the legal consultant banner in five years’ time.
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The legal consultant business model offers lawyers a central service platform, brand and management infrastructure from which to operate, in return for a percentage of the lawyer’s revenue.
The lawyers themselves are self-employed consultants, who retain an average of 70 per cent of their billings, with the remainder taken by the consultancy firm.
Arden head of business services John Llewellyn-Lloyd said: “The pandemic has increased pressure to invest in IT infrastructure and reduce back office costs, but most firms are facing historic lows in available cash, with partners generally reluctant to commit additional capital.
“With a significant unrealised market opportunity, an ever-increasing market share and an attractive and cost-effective recruitment proposition, it is easy to see why the consultancy model makes such a strong investment case for public and private investors. We expect it go from strength to strength with businesses like Keystone and Taylor Rose in the vanguard of what could be an impressive disruption story.”
As a result of the consultancy model, lawyers at AIM-listed Keystone lawyers tend to choose home working over coming into the office, meaning the firm was already set up for remote working when the pandemic hit.