The last ten years have been transformational for the legal industry. A decade of economic downturn, changes to regulation and vast development in smart technology has primed the profession for innovation, inspiring a new era of legal services. What was once a sheltered market has since evolved to reflect the needs and expectations of the modern legal consumer.
In this brave new world, flexibility, accessibility and affordability are increasingly influential factors in the purchasing decisions of businesses in need of legal advice. In turn, traditional large law firms are facing a sharp rise in competition from rapidly growing modern providers offering cost-effective, technology-led legal services.
However, while pressure mounts for corporations to cut their legal spend and new entrants offer an attractive alternative from a financial standpoint, growing concerns regarding the quality of service provided by these new legal practices continues to plague businesses seeking support.
While legal expertise was once table stakes for any organisation practising the law, the diversification of the legal services market has since muddied the waters: today, businesses seeking high-quality legal advice must commit time and effort into researching the type of practice they’re working with and the level of service they can expect to receive. With additional terms, abbreviations and snappy slogans coming left, right and centre, gaining a clear understanding of the key differences between legal service providers of today is critical in protecting your interests.
Know your law firm: a road map for legal services models
Since the introduction of the Legal Services Act 2007, increasing demand for non-traditional legal practices has paved the way for NewLaw – the name given to the burgeoning group of alternative legal service providers (ALSPs) now operating on a global stage. In this section, we outline the key differences between the range of legal services models in today’s market, allowing you to determine the best choice for your current requirements.
Traditional law firms
Traditional law firms are typically structured around partners, who can be joint owners as well as business directors of the firm. These firms predominantly operate on the billable hour; the traditional fee structure which charges clients for the time spent on a certain task. Within the bracket of traditional legal service providers exists a wide variety of law firms large and small, from the boutique firm specialising in aviation law to the magic circle firm raking in large revenues from international cases.
Despite the sharp rise in alternative legal services providers, many businesses are still reluctant to look beyond traditional practices for legal advice or assistance. It’s not hard to see why: after all, the traditional model has been the only option for hundreds of years, and while the industry has long held a reputation as archaic, there is undoubtedly a level of prestige associated with the traditional law firm.
Naturally, many companies are still risk adverse in terms of law services and still favour these firms due to the ‘sense’ of quality assurance in sticking with what you know. However, while this approach presents less risk, it certainly comes at an unnecessarily huge cost.
Due to the nature of their structure, these firms typically cannot afford to be too flexible on rates or fixed fees. All operations revolve around the billable hour, and as a result, clients of traditional practices tend to pay more for their legal services.
What you need to know:
- Traditional firms are licensed by the Solicitors Regulation Authority (SRA) to undertake any legal activity;
- If you receive an inferior quality of service from a lawyer within this type of firm, you can lodge a complaint with the SRA. If you aren’t satisfied with the outcome of your complaint, it can be escalated further to the Legal Ombudsman. In short, your lawyer will be completely accountable for their actions and your interests will be protected;
- Solicitors in traditional law firms must gain necessary qualifications and undergo rigorous and continual training;
- Traditional law firms must hold £3 million of Professional Indemnity Insurance;
- Because of the overhead costs associated with running a traditional firm, legal services from these providers come at a higher price;
- Due to the fee structure of a traditional law firm, there is little correlation between quality of service and cost as the client still gets charged the same amount regardless of the outcome.
Alternative Business Structures
Prior to the Legal Services Act 2007, lawyers in England and Wales could only practice as sole traders, or in partnerships/association with other solicitors. The Legal Services Act 2007 allows for Alternative Business Structures (ABS) to be set up for the provision of legal services.
According to the Chartered Institute of Legal Services – https://www.cilex.org.uk/membership/practice_advice/business_structures/what_is_an_abs ‘Alternative Business Structures allow firms to set up legal partnerships or businesses with non-lawyer managers or those with an interest, defined as shares or control over voting rights. Where non-lawyers are managers of, or have an interest, in an ABS, it must become a licensed body. This means it must be licensed and regulated by a licensing authority under the 2007 Act.’
Where previously, only qualified lawyers could run law firms, this new business model allows non-lawyers in professional management roles to provide legal services to the public.
What you need to know:
- ABS’s are licensed by the Solicitors Regulation Authority (SRA) or the Council of licensing Conveyancers (CLC) to undertake reserved legal activity;
- *For a list of reserved legal activities, see our blog on the differences between a regulated and unregulated practice;
- The Legal Services Act 2007 makes it clear that once a person is authorised to undertake a reserved legal activity, then any legal activity they provide to the public falls under the remit of the Legal Ombudsman;
- An ABS can provide an alternative to sourcing law service provision;
- They can have a more flexible approach to their service offering – e.g. out of hours opening times and possible fixed fees offers;
- They can be more technology driven, providing innovation in their internal infrastructure.
Online legal services
The digital revolution has transformed the way we live and work, simplifying processes and practices across our personal and professional lives. In the legal industry, the rise of digital technology has spurred a growth in the ability to deliver legal services electronically and online with little or no human intervention. The result of this is semi-automated, standardised legal services such as RoadTrafficRepresentation a digital platform which offers a free online assessment of your case and a potential paid-for one-to-one phone call and representation in court. Other examples can include businesses that claim their online technology allows customers to quickly create legal documents at the fraction of the cost of an ordinary solicitor. They can also connect you with a lawyer, usually for an additional cost.
What you need to know:
- While these companies may be connected to lawyers, they do not generally comprise of legally trained practitioners;
- Therefore, they are not licensed or regulated by the SRA: they are ‘legal tech’ companies concerned primarily with creating a fast and cheap legal service for the public through the automation of certain processes;
- Consumers likely have little recourse if they end up with a problematic document from one of these sites. In some T’s & C’s businesses state that its information, software, products and services “may include inaccuracies” and that “information and opinions received via the website should not be relied upon for personal, medical, legal or financial decisions.”
- Sites such as these offer to connect customers with lawyers, but the quality of these lawyers is not guaranteed, or even assessed by the online provider in many cases. Some of these businesses hint at this in their T&C’s, noting that they “do not make any warranty as to the qualifications or competency” of the attorneys used;
- While technology has facilitated the creation and review of legal documents, the need for a legal document is usually preceded by the need for expert legal advice which cannot be received through such a service.
The sphere of online-based legal services now extends to referral-based platforms whose purpose is simply to connect customers to legal practitioners. In effect, these companies aim to be the ‘Trip Advisor’ of the legal world, but should not be confused for genuine legal practices in themselves. These online platforms allow you to source and compare quotes from their network of lawyers.
What you need to know:
- Referral-based companies offer a free service because they can. Just as with any referral scheme, they receive commission from consumers finding a lawyer through their site. The lawyers connected with these companies effectively bid for the work available;
- If you end up employing a “Legal Advisor” from one of these sites, on a full or part time basis, their T&C’s usually state that you must promptly notify them and pay them a sum equal to 20% of such Legal Advisor’s first gross annual remuneration by way of an introduction fee;
- Once again, quality of legal advice is not guaranteed, which is usually clearly stated in terms of service: e.g. “Although we may generally suggest one or more Legal Advisors based on your submitted request, we cannot make any kind of guarantee as to the legal ability, competence, or quality of the Legal Advisors who may be listed on the Site.”
- Therefore, should you receive an inadequate quality of service from a Legal Advisor you instructed through a referral-based platform, the company will not be liable for damages and your interests will not be protected.
Virtual law firms: the 360 Law Group model
While the legal industry has been in dire need of modernisation, we believe that it is possible to offer clients a flexible and cost-effective service without cutting back on quality and dodging responsibility.
Our contribution to the future of legal services is a new model. One that puts legal consumers back in the driver’s seat by giving them the choice of how they instruct their lawyer.
We know that both businesses and individuals deserve affordable and accessible legal advice, but we also value the importance of accountability within the procurement of professional services – after all, there’s no use in disrupting the industry if it’s to do away with quality assurance.
We founded 360 Law Group with the aim of delivering exceptional legal advice on a flexible basis. Under this umbrella group now sits both a regulated practice (360 Law Services) and an unregulated practice (360 Business & Private Client Law Ltd).
What you need to know:
- Whether you use our regulated or unregulated services, all our lawyers are fully qualified with a minimum of 5 years’ experience post qualifying. This means if you are risk adverse, you are in safe hands. All our lawyers and barristers are specialists in their fields and the majority come from industry or the large traditional law firms;
- By operating as a virtual practice and harnessing the power of smart technology in-house, we can afford industry-renowned heavyweights and offer our clients a far more cost-effective service;
- We understand the risk adverse and have created our model to ensure the quality of work and the quality of our lawyers is on par with traditional law practices. We have simply removed the costly overheads associated with the traditional law model and pass on these savings to our clients;
- Fee structures depend on your requirements, as we offer our services either on a subscription/fixed fee basis or reduced hourly rates;
- 360 Law Group is now the only law firm in the UK that can offer ALL legal services on a regulated or unregulated basis, through its relevant subsidiaries, which makes us the first law firm in history to offer you the choice within one group of companies. To determine which you should choose, head on over to our blog on deregulation or have a read through our website
In the face of economic instability and digital transformation, the legal sector has undergone vast upheaval to reflect the changing needs of society. As clients cut their legal budgets and demand cost-effective support, competition from new market entrants boasting cheap alternatives continues to threaten the traditional model.
However, while the profession may have been in dire need of a face-lift, the ‘uber-fication’ of law raises many concerns regarding the quality of service from new providers. With new legal-tech companies appearing on the scene day by day, gaining a clear understanding of the service on offer and the terms and conditions associated with the company will enable you to make an informed decision when seeking legal support.
If you need any further information on the diverse options open to you, please do not hesitate to give us a call. We would be happy to help you.