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Our recent report explores three competitive threats facing City law firms. The steady growth of legal consultants and platform law firms proved a key threat and for good reason.

Research from Arden describes how 3000 of the UK's 10,000 law firms may close or merge in the next five years, and how consultancy may absorb lawyers or entire teams. This shift is solidified by research from our previous report, Rise of the legal consultants, which suggests that as many as one-third of lawyers will become legal consultants by 2026. 

City firms face huge recruitment, retention, and commercial challenges from the consultancy model. The threat looms large, as increasing numbers of lawyers make the move to revenue-sharing firms. In this article, we track the growth of legal consultants, explore the extent of the threat they pose, and examine some of the pros and cons of the platform model.

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The looming threat of legal consultants

Platform law firms provide an alternative operating model. Lawyers work as self-employed consultants, sharing revenue and keeping the bulk of their client fees. All excess funds are spent via a centralised network, which generally provides essential tools that lawyers might need to fulfil and excel in their roles: insurance, branding, , and so on.

The model has already attracted many lawyers. According to , the number of lawyers at fee-sharing firms has increased by 45% in the past three years alone. And the platform law firms themselves are certainly thriving. Consider three major players: , who currently employ 350 fee earners; , who employ more than 400 earners and , who employ more than 500. Each of these firms have seen rapid growth of lawyers and expect that to continue. 

So, that begs the question: why are so many lawyers ditching City firms for consultancy?

Pros and cons of legal consultancy for lawyers

The pros for lawyers

Perhaps the most cited advantage of the move to platform law if greater autonomy. The revenue-sharing model allows lawyers to choose clients, set their schedules, work the hours they want, all with no need to request permission from managers. Legal consultants can work remotely, or opt for a hybrid model. They could take three-hour lunch breaks, if they wanted.

In simple terms, they have far more freedom. That's a huge pull considering 60% of mid-level associates said they'd move jobs fora better work-life balance, while only 27% said they would leave for more money, according to an . An an improved work-life balance appeals even more to lawyers who put careers on hold to have children or provide family care. The consultancy model allows them to balance their responsibilities. And, as a consequence of that freedom, platform firms improve .

Too much bureaucracy is one of the most common complaints from lawyers at traditional firms. In contrast, legal consultants receive the necessary tech and tools needed to exceed in their roles and often operate under non-hierarchical structures with short chains of command. The result is faster decision-making, less time spent on admin and more time spent with clients. For many lawyers, the client-focused element is the most enjoyable part of the role which increases the attraction of legal consultancy provoking a recruitment problem for traditional law firms.

The cons for lawyers

Risk is an obvious drawback of legal consultancy for lawyers. Legal consultants need to find their own clients and build up a reliable client base. The obvious result is a loss of immediate revenue which can last into the long-term. In our report, James Harper, Senior General Counsel at ³ÉÈËÓ°Òô, compared the switch to 'setting your up your own business".

Legal consultancy takes away stability. Lawyers are faced with no guaranteed salary, no big law branding, no prescribed work. Everything comes down to pre-existing networks, the work consultants can put in, self-discipline and drive. The need for self-discipline inverts the benefit of freedom: lawyers are given freedom, but that also means they are free to fail.

The abovementioned flat structured can also prove problematic. Hierarchies provide benefits, not least in the form of continuity and collaboration. Legal consultants are often expected to work alone.

Pros and cons of legal consultants for clients

The pros for clients

The first and most obvious is money. The revenue sharing model broadly incentivises reduced costs based on the simple basis of competition of demand. Sky-high fixed prices will not attract hundreds of clients, an area that proves particularly tough for lawyers just making the switch. So clients can take advantage, gaining access to top quality lawyers at a reduced fixed fee. 

The nature of the business model can increase general return on investment. Legal consultants have their earnings tied to the success of the client relationship, which means the consultant will prioritise the needs and desires of the client. And, of course, we noted that less admin led to more client-facing time: a pro for lawyers and clients alike.

Many platform law firms offer fixed fee approaches, which minimises risks. Double billing becomes redundant and the need for quick solutions becomes paramount.

A final benefit stems from the make-up of platform firms. Firms, as we have briefly mentioned, are more inclined to embrace automation and provide legal tech solutions. The embrace of legal tech alongside a centralised business model can lead to serious cost-savings, which may be passed down to the clients, and allows for faster and more effective solutions.

The cons for clients

Platform law firms arguably lack the personal touch. Traditional firms and City law firms pride themselves on building and maintaining strong personal relationships with clients, often over many years, which can help speed up the legal process and ensure that solutions better meet client expectations. Interactions with platform firms can feel transactional in comparison.

The transactional nature is compounded by the abovementioned fixed fee system. It does, as mentioned, incentivise quick results, but it can also incentivise cutting corners, making mistakes due to speed and providing a just-about-acceptable solution rather than the best possible solution. Fixed fee legal services also offer less room for adaption, the risk of overpaying, and a potential misalignment of interests, all of which will hit the client. 

And, finally, clients must remember that platform firms are digital-first. The reliance and embrace of tech provides huge benefits, but it can also reduce effective human interaction and lead to strained relationships. Videoconferencing, emails, and phone calls are the most likely form of communication. Risks are introduced. Non-verbal cues might be overlooked, the nuances of complex legal matters missed, and an overall less effective approach adopted.

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