A leading alternative law firm expects to see its market share grow as a result of larger traditional firms “validating” its model by launching new service offerings.
Last week, Corrs Chambers Westgarth
broke ranks with its large law firm competitors to launch new legal resourcing company Orbit, which will provide contracted legal expertise to in-house teams to meet project-based needs.
More large firms are expected to soon follow with alternative service offerings, with George Beaton, executive chairman of Beaton Research + Consulting, claiming “several” competitors are already moving in this direction.
However, AdventBalance CEO Ken Jagger says any move from traditional ‘BigLaw’ competitors was in fact a “validation” of the firm’s business model, and he only expected that his own firm would benefit from these moves.
“The conclusion we came to when we set up this business six and a half years ago was that we think about 80% of a traditional firm’s legal work can be done using an AdventBalance style model or other alternatives,” he says.
“So the share of the legal market going to firms like ours and other alternatives will increase, and the share dedicated to the traditional model will decrease; I only see the market for our services getting larger as a result of this validation.”
Jagger says law firms were finally recognising client demand for such services.
“There is a tremendous market share waiting to be had and what firms are recognising now is that if they want to keep – let alone expand – market share they will need to have alternative ways of delivering legal services.”
However, BigLaw firms will have a challenge implementing such models, with Jagger suggesting it will be difficult to convince BigLaw partners to use them.
“I think their partners should use them, because it can be profitable, but a lot will be worried about the cannibalization risk; if they start to deliver legal services in this way, why would clients use their high cost, high leverage service?," he says.
“So the danger for law firms is that they set up a model like this but don’t actually promote it and use it and provide it to their clients."
Jagger gave the example of the market’s legal process outsourcing (LPO) efforts.
“A lot of firms entered into LPO arrangements, but reports are those firms haven’t had a lot of work, as the traditional way of working is more profitable.”
However, he says firms definitely had the capability to get it right if they were dedicated to running it as a business and not just an ‘ancillary giveaway’.
“I’m just skeptical if many of the law firms will be able to do that."
It is much easier to set up such a business from scratch, Jagger says, as BigLaw firms were burdened by existing partnership structures that were not conducive to such disruptive moves. In fact, The CEO expressed surprise it had taken larger Australian firms six and a half years, as he had been expecting something sooner.
Despite new competition, AdventBalance is only expecting more work to become available for alternative business model firms and service providers. Jagger believes there is room for new players due to the potential market share.
AdventBalance currently fields 140 lawyers in Australia and Asia, with Jagger saying there is a hunger from clients for a service provider who was dedicated to an alternative firm structure as well as alterative service delivery.
Corrs has predicted that it will have 30 to 40 lawyers within 6 months, with Orbit targeting high quality candidates with 3+ years’ experience.