The Legal Services Act – what now for Chambers ?

My article in the Sept 2011 edition of Clerksroom Magazine, a free monthly publication for clerks and managers in barristers’ chambers:

You’d have had to be on some pretty faraway planet not to have heard of the Legal Services Act 2007 (“LSA”) and its anticipated impact on the legal marketplace.  “Tesco Law”, “deregulation”, “Big Bang” are just some of the (rather misleading) descriptions you will have been unable to avoid in various media.

Alongside this, we have seen news of a variety of interesting developments in the legal services market.  The prime example is Quality Solicitors – a national network of solicitors’ firms, effectively operating as franchises under the QS brand.  It has been heavily advertised (including a TV advert featuring Amanda Holden) and is in the process of setting up “Legal Access Points” at counters in around 1000 branches of WH Smith, where they offer free first consultations.  Its stated focus is centred on providing easy access to lawyers for the public and high standards of customer service.

 

We are also seeing signs of expansion and consolidation in the marketplace.  A good example is Parabis, a group that has rapidly evolved into a £100 million business through the acquisition of solicitors firms and non-legal insurance related enterprises.  Parabis have stated their intention to convert to an alternative business structure, as have several other high profile firms which have cited external investment for growth as the driving force.  And of course there is the prospect of Co-Op and other retailers (not Tesco, so far) entering the market.

 

In the context of the history of the legal marketplace these are undoubtedly extreme innovations, however it is important to point out that they are not in any way dependent on the LSA (the relevant provisions of which are yet to take effect).  They have developed within the existing regulatory framework.  Businesses are pushing the boundaries of existing ways of providing legal services, even before the doors are open to alternative structures and non-lawyer ownership.

 

So, increased customer focus, market consolidation and external ownership: what has all this got to do with running a barristers’ chambers ?  After all, barristers just want to be barristers, not entrepreneurs.  They want to get on with the business of being independent specialist legal practitioners.  More barristers aspire to being Sumption QC than Lord Sugar and I doubt we will be seeing many appearing on Dragon’s Den.  For that reason (if you’ll forgive me …) it is hard to see barristers chambers taking such large leaps to come up with new innovative business structures.  And why should they ? The tried and tested virtues of quality, specialisation and value have proven to be effective even by the most modern commercial standards.

 

But what the Bar will have less control over is the huge potential for change in the dynamic of the market in which we are operating.

 

Consider then the conversations I’m sure many of us have had with solicitors about that “demanding client”, where they apologetically ask for that little bit extra – more work, within a shorter timeframe and for less money – on the grounds that the client is “a big corporate” throwing its weight about.  (You may, like me, have found these conversations more frequent of late).  Now consider what business might be like when this type of client literally becomes the instructing firm, by way of ownership a substantial financial stake or indeed its entirety.  Demands like this might then become the norm instead of the exception, requiring the Bar to up its game in terms of cost and service in order to compete for the large volume of work that these firms will have access to.

 

We have become used to dictating our terms of service, taking for granted the ability to charge brief fees, booking fees, refreshers and open-ended hourly rates, as well as relying on solicitors to accept liability for payment.  We could see a market where this new breed of instructing firm has little time for what we regard as traditionally accepted practices and chooses to leverage its increased buying power to challenge terms of this sort.  Many of us already see this approach to some extent from providers of bulk work, such as insurers and public bodies.  It looks set to become more widespread.

 

Similarly, those instructing might simply be looking for a set of chambers to service their needs in a variety of practice areas at a fixed cost and with a uniform level of service.  I suspect they would not be particularly interested in the friction this might cause to our internal management procedures.  There would inevitably be winners and losers in chambers as to who gets the “better” work (and therefore the better fees) and this would be likely to test the cohesion of the chambers structure.

 

It is fair to say that the Bar has been very successful over the past decade in responding to the increasing challenges of modern practice.  With the emerging potential for much more radical change and at a much faster pace, its ability to evolve is likely to be tested yet further.  The strengths of quality, specialisation and value will continue to be key but this will need to be combined with more astute management than ever.

 

As we all know, it is one of the main roles of the barristers’ clerk to reconcile the demands of clients with the expectations of barristers.  It looks as though our jobs could be about to get a whole lot harder.