Guest post by Guy and Chris Setford, co-CEOs of Setfords
Guy (l) and Chris Setford
Fifteen years ago this month saw the very first alternative business structure (ABS). At the time, the prospect of non-lawyers owning law firms was dubbed “Tesco Law”: the idea that supermarkets would start providing legal services, making getting legal advice as simple as picking a packet of cereal off the shelves.
Although a handful of big consumer businesses have dipped their toes in legal services, this isn’t quite what has happened. Instead, we’ve seen far more diversity as ABSs have broken the assumption that there was one right way to build, own and run a law firm.
For two centuries, the partnership was the dominant law firm model. Its endurance is a measure of its success and for many lawyers and many law firms it remains the right structure.
But partnership is not right for everyone. Ownership is typically only concentrated among lawyers, profits are generally distributed to partners and future investment competes with what those partners take home as reward for their hard work.
Opening up ownership gave law firms another option. It allowed firms like mine to bring in external capital, retain and invest profits in our future growth, and involve people from outside the legal profession in ownership and management.
This December marks 10 years since we became an ABS. This has been an important part of our growth. Today, we have more than 650 self-employed consultant lawyers who practice on our platform – all supported by 200 non-lawyer experts working across technology, operations and marketing.
Being an ABS made it easier for us to take a bet and invest millions in building our own technology and data capabilities.
We now have a dedicated technology business, Setfords Technology Solutions, with a team of more than 35 technologists. We have built our own case, accounts and practice management platform, Halo, and a data foundation, Helix, that allows us to understand and improve how the business operates using AI.
We’re seeing those investments pay off today. But they required capital, outside specialist expertise and time. Being an ABS has helped us make those investments and reward the people who make our platform work properly.
We may be lawyers, but we know that no law firm succeeds just because of its lawyers. Providing legal services is a team sport and the people who will determine whether a firm continues to win business include software engineers, data scientists, product specialists, operations, admin, accounts, secretaries, compliance professionals, and marketers.
The (much overdue) technology revolution now taking place in legal services will make having a team with multi-disciplinary capabilities more vital still.
One of the great strengths of the ABS reforms was recognising that changing the ownership structure of legal businesses could also help us change the services we provide and improve consumer outcomes.
As a result, new law firms and new business models have emerged. Some have succeeded and some have failed. Consumers have got more choice and a healthy market has developed.
Fifteen years on, this feels particularly relevant because the regulatory framework for legal services is once again being debated.
There are good reasons for that. Technology is developing quickly (yes, we mean AI). Consumer expectations are (rightly) increasing. The boundaries between regulated and unregulated legal services are not always easy for clients to understand (yes, we mean AI again).
These changes mean we’re right to be prepared to look again at how legal services are regulated again. But let’s learn from our successes of the past 15 years.
Regulation should be rigorous about what matters: professional standards, ethical behaviour, consumer outcomes and the protection of client money (who better to take responsibility for protecting clients’ money than the professionals bound to act on their behalf?).
It should be much more cautious about prescribing what a law firm ought to look like.
Partnerships will remain an important part of the legal sector. So will ABSs, listed businesses, platform firms and models that probably haven’t been invented yet.
The success of the ABS experiment is not that one of those models has succeeded at the expense of the others. It is that we now have all of them.
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