Legal Pioneers: Whale Rock – the business that cannot wait to become an MDP
Kushner: the greatest advantage is the client getting a one-stop shop
The latest instalment of our Legal Pioneers series looks at the Whale Rock Professional Services Group, which has legal, accountancy and company secretarial arms. Clients already enjoy the benefits of the one-stop shop, writes Dan Bindman, but becoming an MDP will help considerably.
There can be few lawyer businessmen who are looking forward to the arrival of the multi-disciplinary partnership (MDP) version of alternative business structures (ABS) more than Nigel Kushner, founder and CEO of Whale Rock Legal.
But he also has a profound concern about what he believes will be a volatile flashpoint within ABS structures. Non-professional owners and directors of legal businesses will clash, he predicts, with lawyers over the need to meet professional obligations versus the desire to generate fast profits.
Whale Rock Legal is currently one of three businesses that together make up Whale Rock Professional Services Group. The other two are Whale Rock Accounting and Whale Rock Company Secretariat. The law firm, incorporated in 2008, has five lawyers on its books and a further six consultants who work under a fee-sharing arrangement.
Together, the three entities form a unique niche business that focuses on providing outsourced commercial support to companies, working alongside their in-house legal and other teams. They specialise in the oil and gas and mining sectors, as well as commodities and derivatives contracts and hedge and investment funds.
In order to get as close as they could to an MDP under the current rules, the three entities – each limited companies owned by the directors and in some cases employees – had to be placed beneath a limited liability partnership, which owns the brand. “It’s very complex,” says Mr Kushner. “I can’t wait to become an MDP and put a more transparent structure in place. What we have works and is fully compliant [with SRA rules], but it wasn’t easy to get there.”
It was worth it for the benefits of being able to offer a seamless service to clients across the three disciplines, he says. “The greatest advantage to my mind is the client getting a one-stop shop. It means that the client has different sets of professionals who understand them and their business, working in tandem.”
He gives as an example the meeting he held earlier in the day. The client was looking to take a significant investor on board in the company, to whom it would sell shares. “We had a company secretary, a lawyer and an accountant attend the meeting. We all understand the business and all had significant input into the discussions.”
Mr Kushner adds that there are advantages for clients in having closely linked entities working together, in that potential professional rivalries are set aside. Also, when the client wants something done urgently, “we have all the documents and can just get up from our desks, and sit together in a meeting room. You can’t do that in a different environment”.
Whale Rock Legal’s overheads are “less than 50% of a traditional mid-sized City law firm,” he says, meaning that charge-out rates are correspondingly low. This is achieved by having no secretaries, its professionals using laptops and a “hotdesk”, and a single office manager servicing the three businesses and providing invoicing and billing support.
“Our clients almost think Christmas has come early when they see that we can do a good job and are very capable indeed – and that we’re half the price,” he says.
Mr Kushner first trained and qualified as a solicitor at top 20 City firm Clyde & Co, then worked for a number of years as an in-house lawyer for large businesses. The experience, he says, has equipped him to act as a part-time in-house counsel, in particular to deliver “commercial, solution-driven approaches” to clients, who are urgently seeking practical advice and not lengthy legal opinions “full of caveats”.
The issue of Chinese walls is “a problem that needs to be managed, and which we do manage”, he admits, but he anticipates that the new MDP rules will make life easier. Practical measures that have to be adopted when different disciplines work in close proximity include making sure “legal documents are locked away so that an accountant can’t walk into our part of the office and look at them” and ensuring lawyers are not in earshot of the accountants when on the telephone.
The other Whale Rock lawyers have similarly impressive CVs, full of major City firms and corporations – managing director Elliot Shear qualified at Linklaters, worked in-house and was a corporate partner of Nabarro before joining the business. Among the consultants is the familar name of Gary Yantin – the man behind HighStreetLawyer – whose background as a commercial property lawyer includes head of legal roles at several businesses, including Thistle Hotels.
The consultants have arrangements akin to virtual law firms, keeping 60% of the fees they bill for their own clients or 50% for any work carried out for Whale Rock Legal’s own clients. They generally bring around £150,000-200,000 of business with them.
Future plans include adding further professional services to the current portfolio. “I believe that in two to three years’ time there will likely be another couple of Whale Rock entities,” Mr Kushner reveals. These could include Financial Services Authority compliance and IT support. Another possible development could be to hive off the corporate finance capability, which currently runs within the accounting business.
“But these are all up in the air,” he cautions. “We’re young and we want to get the three businesses we have up and running first before we try to become too entrepreneurial too quickly, which in my view can be dangerous.”
On possible opportunities for Whale Rock presented by ABSs, Mr Kushner is purposely vague, yet plainly upbeat. The group is concentrating on building its business and brand, and it is too soon to take a view on an exit strategy, or external funding, or mergers, he says. But there might be potential at some point for future tie-ups with niche entities in, for example, the oil and gas sector, he muses.
The impact of ABSs on the legal profession “really is going to be revolutionary”, he predicts. But he foresees a fundamental problem inherent in ABS structures: non-professionals who are directors and owners of legal businesses will clash with lawyers on the battleground of professional obligations versus the pursuit of profit.
“They’re not lawyers and were not brought up as lawyers. We are quite a strange breed and we know how we need to act professionally. There is a great danger where non-lawyers are brought in… They want to make money… and they will be less bothered than a qualified solicitor, who understands his professional obligations, to comply with those because they’ll be wanting to make a fast buck.”
To read the first Legal Pioneers profile, on MTA Solicitors, click here, and the second on Parabis is here. If you are at a pioneering law firm and would like to be featured in this series, contact the editor, Neil Rose, on firstname.lastname@example.org.
Tags: accountants, MDP, multi-disciplinary practice
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