Partnership — once the Holy Grail for solicitors at corporate elite law firms — is beginning to lose its lustre.
And it is not just the younger generation falling out of love with the concept — well-established City big-hitters are becoming less enamoured and turning to innovative practice models that do not involve billing targets and the drudgery of administration.
At the end of last week, Lawyers on Demand (LoD), launched in 2008 to “shake up traditional models”, separated from Berwin Leighton Paisner, the law firm that is its mother ship, to become an independent business. LoD has expanded over four years — it now calls on the services of more than 100 “freelance” lawyers — but it is not the only player in an increasingly diverging market.
So potentially popular is the option of freelancing at the high corporate end that specialist headhunters are taking an interest. They are targeting Square Mile lawyers with big client followings, but who are frustrated by traditional partnerships. “I was bored with working full-time, all day, every day, and having so much of my life dominated by time recording,” says one City technology sector-specialist lawyer, who spent ten years as a partner at a leading firm before bailing out. “I wanted to redress the balance while leveraging the great client base I had.”
After taking advice, that lawyer is working effectively for himself, but attached to two law firms — one a global player and the other a top-flight City practice. The deal he cut is one that experts anticipate will become highly popular, not least after recent corporate law firm partnership clear-outs. Practices are also wary of big-ticket partner lateral-hires as the shock-waves caused by guaranteed drawings at the now bust Dewey & LeBoeuf continue to be felt.
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Mike Jones, chief executive of the legal sector recruitment agency IV Talent, says that even highly successful senior-level City partners are becoming disenchanted with traditional partnerships: “They continue to love the client work and the clients themselves, as well as the legal aspects of the job and even the business development side, but they have become fed up with the rest of the stuff that goes with being a partner — the huge draw on one’s time for various meetings and events, not to mention the micro-management that most firms tend to load on their partners.”
Since January, Jones’s agency has run a scheme that aims to create perfect marriages between heavy hitting lawyers and law firms open to alternative styles of practice. The basic model involves the firm’s providing an umbrella brand for freelance lawyers so that their client followings feel psychologically comfortable as well as being fully covered by professional indemnity insurance. Freelance lawyers will keep 70 per cent of fees paid from work they bring to the firm, with the practice keeping 25 per cent and the recruitment agency retaining 5 per cent.
But the model is flexible, so if the lawyer brings in work that is partly passed on to the firm’s partners or associates, the freelance takes a 25 per cent cut of fees, with the firm taking 70 per cent and the agency keeping its 5 per cent slice. If the law firm sources work that it decides the freelance lawyer is best placed to do, then the split is 45 per cent to the freelance and 50 per cent to the firm; with the agency taking 5 per cent.
In most cases the freelance lawyer will be in the driving seat, potentially taking a far larger share of profit, with less of the administrative burden than those toiling at the partnership wheel.
So what’s in it for law firms? “The ability to attract high-powered lawyers at low financial risk,” says Jones. “There are no recruitment fees, there are no guaranteed joining fees, there is no guaranteed salary or equity given away.”
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Charlie Keeling, the chief operating officer at Field Fisher Waterhouse, says his firm has several freelance arrangements. “The advantage is that we are not taking on a fixed cost. There are some very good partners who have left law firms. They have fantastic client networks and good technical skills, but they aren’t looking to become a partner in another firm. They are looking for a portfolio element where they bring their skills to bear on two, three or even four law firms.”
The logical extension of this model is “virtual” law firms, practices entirely populated by freelance consultants who contribute a share of their fees to joint marketing initiatives, a bare minimum of administration and the maintenance of physical meeting spaces.
Andrea Nicholls is a litigation solicitor with Keystone Law, a virtual firm that has 100 lawyers on its books: “The overheads of many traditional law firms are unsustainable. This model is better for me and my clients because I don’t have to pass down work to anyone else. If somebody instructs me, they get me — I am able to charge a fee rate that lets me run a case from start to finish. That is a huge advantage.”
But there are risks for freelance lawyers — even those with years of experience and loyal client followings. As one freelance in the City says: “If I don’t bring in the work, I don’t eat.”