Morris: Financial incentives to refer work
Growing its new legal arm is a big priority for AIM-listed professional services business DSW Capital, with doubling the number of fee-earners the immediate goal, its chief executive has told Legal Futures.
DSW, which owns a network of finance and accountancy firms under the Dow Schofield Watts brand, entered the legal market late last year with a £6.1m deal for Surrey firm DR Solicitors, a fee-share firm focused on healthcare.
A half-year trading update last week said DSW’s revenue increased by 32% to £10.3m in the six months to 30 September, driven by the acquisition of DR Solicitors and growth within existing DSW licensee businesses.
DSW operates an unusual licence model, under which the 24 licensee businesses – with between them 144 fee-earners across 12 offices – can use the Dow Schofield Watts brand (though not all do) and access its network. DSW can provide start-up funding and offers a wide range of back-office services.
In return, DSW receives 22% of the licensee’s revenue and, in some cases, a percentage of its profits.
DR Solicitors has grown from 20 to 26 lawyers since joining the group and DSW chief executive Shru Morris said they had helped the law firm expand into more specialist dental work.
But DR was also bought as the platform for DSW’s move into law. Ms Morris said the focus was on “helping ambitious lawyers who want to set up their own businesses” as licencees, as well as individuals or teams who simply wanted to operate as consultants through DR, rather than further acquisitions.
Dating back to 2003, DR Solicitors was one of the first fee-share firms but, unlike the typical model, it does not require consultants to generate their own work.
Ms Morris, an accountant who for seven years to 2021 worked at North-West law firm Napthens, first as finance director and then chief executive, said there were financial incentives to refer work across the network. “Ultimately if there’s enough work being referred, it should in theory fund the license fee,” she said.
DSW measured shareholder value through the number of fee-earners and Ms Morris said the aim was to reach 200 “in short order” – the expansion of DR was “a big part of that” and the intention was to double the number of lawyers.
While platforms enabling firms to set up like DSW does may be in short supply, there is no shortage of options for lawyers looking to move into a fee-share practice. Ms Morris said: “We’ve got a fairly unique proposition, which is that we win a lot of work. There’s a lot of lawyers who want to just come and deliver the work. They don’t really want to generate it themselves.”
DR Solicitors founders Daphne Robertson and Nils Christiansen are together the second biggest shareholders in DSW, with 12.75% of its stock.
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