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New Business Models for the Bar – the demise of some sets and the flourishing of others

By Catherine Bailey Managing Director Bar Marketing Limited

Following the demise of Tooks Chambers there seems to have been a flurry of interest by sets looking to change the way they do business.  I wonder if they believe that the new structures are a utopian answer to their problems or if they really appreciate that it will be a combination of structural change, attitude change and a commitment to concerted marketing efforts (by proper professionals) that will deliver the results they are looking for.

At the recent Legal Futures forum on new business models for the Bar delegates were invited to hear from a selection of legal businesses on how they had amended their structures in order to meet the challenges of the modern Bar.  The panel comprised of Riverview Law, Artesian Law, Outer Temple Chambers, Principia Law, Red Bar Law, Richmond Chambers, Ewen Macleod from the Bar Standards Board and Maura McGowan QC, Chairman of the Bar Council.  Below is my take on what they had to say and the different structures available along with their advantages and disadvantages.

The ‘one-stop-shop’

It appears that the Riverview model focuses on two distinct business areas; outsourcing for large corporates with fixed fees for multi-year contracts (previously done by panels) and event work which is usually one-off activity work (they do not provide for PI or criminal work).  Both sectors are Barrister led, giving the barrister the ability to select the right team of associates and support people for the job.  The aim is to deliver a cost effective and efficient solution to the client’s issue with the minimum overhead.  The Riverview model permits them to add barristers when demand for specific areas of work increases (one assumes it also permits them to decrease barristers as required, although this was not mentioned).  Public Access issues are resolved by the involvement of their solicitor led section and their ‘one-stop-shop ‘ approach is proving popular with US law firms which are used to a more integrated approach.

The fee-earner option

Artesian Law on the other hand deal directly with members of the public and also the criminal justice system.  Their management structure comprises of barristers and a solicitor which enables them provide traditional advocacy and litigation services direct to the public. It also gives them flexibility on how the practice is run and subsequently expanded (and contracted).  For example, they can expand their service offering by hiring relevant fee earners who are then supervised by the solicitor partner.

Traditional with a twist

In a more traditional approach Outer Temple Chambers Commercial Director, Christine Kings outlined how they have adapted the traditional model of chambers to suit the changes in the market and their international aspirations.  She commented on the strategic sessions that took place within chambers a number of years ago and the conscious decision to move the criminal team into white collar crime, health & safety and financial services areas.  As a result, they decreased their dependency on public funded work from 30% to 4.62%.  A smart move indeed!  They also invested in creating a brand for chambers and an international dimension to increase their business opportunities.  It was a move that presented a number of issues including the hot topic of income levels & associated contribution costs.  As might be expected, some members felt they were ‘carrying’ lower earning members if the contribution percentages were consistent across the set.  So, they restructured the contribution model.  Now the more you earn the less percentage you pay.  This method ensures the set remains business focussed and helps to retain the highest earners.

Outer Temple also took the opportunity to restructure chambers into two separate business units; Health and Business.  Each unit has a Head and controls its own marketing budget, business plan and growth strategy.  Whilst the departments remain interlinked and leverage the Outer Temple brand, should the situation arise in the future where they need to diverge completely, the majority of the work is already done. This approach is common practice in a large number of public and private companies where it is particularly attractive to private equity financers.

The supply chain option

With the banning of referral feels and the increased scrutiny of claims management companies, it was only a matter of time before an entity was created to maximise the opportunities these presented.  And so Principia Law was formed.  The personal injury firm was set up last year by claims management company Helphire Group with the specific purpose of becoming an ABS. Its management team includes solicitors and barristers and thus provides public access.  They leverage the ‘barrister brand’ in their marketing, playing on the public perception that barristers are more highly qualified than solicitors and thus hiring one gives better value for money and a higher quality of service.    

The Pay-as-you-go

Red Bar Law was formed by Hatti Suvari (non-lawyer) and John Esplen who have combined their previous legal and business backgrounds to offer clients a streamlined practical and cost-effective approach to legal services.  They are striving to put client service at the centre of their business by offering fixed-cost pricing and plain English project planning (with clients paying at each project / matter milestone) so that the client clearly understand the legal process and the costs involved in their cases.  It appears that once they have a matter they will resource appropriate self-employed barristers, which to me makes it appear more of a brokerage service (apologies to Red Bar if I misunderstood). 

The specialist

Richmond Chambers is a specialist immigration set.  Their team comprises 4 barristers, 4 paralegals and one non-lawyer.  The management team sees 2 barristers deal with the SRA compliance and marketing whilst the non-lawyer is responsible for the financial running of the business.  The advantages of the new structure for them are greater flexibility in how they operate and speedier decision making.  The disadvantages are an increase in record keeping and risk management, although they do view this as a means to increasing their client care.  The flexibility that the new structure presents to them will be more apparent in the future when they envisage being able to offer employed barrister positions for newly qualified practitioners alongside flexible remuneration packages for self-employed barristers (including dual practice arrangements) and partnerships (compete with profit share) for senior practitioners.

The future of public funded

When asked if the traditional chambers structure is viable for public funded work, Maura McGowan QC commented that she didn’t think the world was over for traditional sets.  However, she did feel that they needed to adapt; maybe fewer staff, decreased overheads, smaller premises and blended work.  Sets need to look to the transferable skills their barristers have so that they can subsidise the public funded parts of the business.  I can imagine there will be a number of different views on that!

Diversification is perhaps the key one, though this is challenging. Some Chambers have looked at using their skills in crime to stretch into areas such as professional misconduct, but the problem there is that such areas are already well catered for by other barristers. Others have looked at gaining a more international focus, e.g. crime related to cross-border fraud and asset seizure. But again, there are sets that focus on this already.  The truth is that while there is some 'stretching' possible for largely legal aid/crime-based sets the opportunities to change are not great.

Maybe a ‘virtual’ style chambers is indeed the answer and perhaps it will help to reduce costs to such an extent that the public funded work becomes more viable.

Answers breed more questions

One thing that struck me during the forum was the number of new ABS’ which have barristers with dual practices.  Is this because the barristers aren’t confident in the ABS’s to move their full time?  Is it because the ABS doesn’t want to take them full time (giving them more flexibility to develop the business along with market demand)? Are the ABS overheads lower because the dual practicing barristers are actually doing their work at their other chambers (and therefore that chambers is really carrying the overhead)? Has the Bar really changed at all or is it implementing a new range of door tenancies?

With the exception of Riverview Law the other ABS’ appear to be small businesses with few support staff and virtually no clerks (clerking teams weren’t mentioned at all by any of the ABS’).  Concerns then must include who would agree the barrister’s fees, in particular brief fees? Who runs the diary and who performs all of the functions that counsel take for granted from clerks? If the answer is the barristers themselves, then how can a barrister have sufficient time to run what it would be hoped would be a busy practice and deal with all of the above, and that's before you consider any loss of internal referral work e.g. from leader to junior and vice versa that the clerks actually make happen.

Whichever structure type chambers decide to adopt they will need to market their services effectively, to the right audience at the right time with the right messages.  They need to identify their current strengths and which skills are transferable to more profitable areas.  They will need to look at the market demand in those areas and the market saturation. They will need a realistic and deliverable plan for growth and they will need to deliver that plan on time and on budget. What they can’t do is nothing!

Catherine Bailey

Managing Director
Bar Marketing Limited
M: 0771 434 5072
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www.barmarketing.co.uk
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