Unregulated is the new black: The truth behind the trend sweeping the legal industry
As you know, 2019 saw a momentous shift in direction from the Solicitors Regulation Authority.
Just over ten years since the Legal Services Act 2007 came into force, the regulatory body decided the industry was finally ready for real change. Since November 25th of last year, Solicitors have been able to practice on non-reserved matters within an unregulated law firm using the title “Solicitor”. The regulations have now even set a path for SRA regulated practices to deregulate.
In our opinion, it’s a giant leap in the right direction - but then, we would say that.
When we set up our firm in 2014, we chose to deliver legal services to businesses and private clients on an unregulated basis using an innovative corporate structure, and state of the art technology to support a low-overhead model. In doing so, we were able to bring to market a truly competitive offer: high quality legal advice and services, yes using Solicitors and Barristers as “consultant lawyers”, at realistic rates.
Amongst a sea of traditional firms battling for the title as the most prestigious, we dared to demystify the profession by providing clients with what they really wanted: affordability, reliability and transparency. Our consultant lawyers weren’t and still aren’t any different to those you would work with when contracting a high-profile City firm. In fact, many of our lawyers have come from magic circle firms themselves after discovering the benefits of working outside of the restrictive, traditional model.
Of course, back then, we weren’t legally allowed to call our lawyers ‘solicitors’ or ‘barristers’. Those terms were protected at law. In order to avoid breaching legislation, we hired ‘consultant lawyers’ - Solicitors and Barristers with at least five years post-qualification experience - to work for our forward-thinking firm.
Then, in 2017, we became the first legal practice to offer both unregulated and regulated services under the same group with the addition of our ABS practice, 360 Law Services.
Naturally, we welcomed the seismic shift within the SRA’s rule-change; we celebrated the introduction of the new regulation as a win for the legal profession. As clients increasingly push for cost-effective services, firms are now under pressure to rethink their delivery mechanisms - a pressing issue the SRA has clearly recognised and reflected in their recent update.
As predicted, providing unregulated services has become the latest industry trends. Everywhere you look, big-name players of the sector are branding themselves innovators, stating their intention to overhaul their entire ethos and become unregulated.
That’s all well and good - in theory. In reality, it’s practically impossible for a law firm operating on the traditional structure to offer the benefits that should come with working with an unregulated practice.
It’s simple: they’re still held back by the ball and chain that is their high-overhead model.
As a virtual firm who isn’t bound by bricks and mortar office blocks and legions of admin staff, we truly can offer competitive rates. But a City firm whose business has operated on the same foundations of fancy offices, linear career paths and traditional fee structures is simply not in a position to reduce their hourly rates - that is, unless they are prepared to physically remove the overheads that drive their operating costs up.
Despite mounting pressure to adapt and evolve in line with client demands, firms must continue to pay well or their talent will leave. As such, they are left with little budget to invest in cutting-edge technology and innovation. And, since partners continue to be remunerated handsomely, the appetite for real innovation is low.
During a recent panel discussion hosted by The Lawyer, a collection of law firm leaders gathered to discuss the future of the legal profession. The key takeaway? Traditional models are outdated and long in need of overhaul.
During the roundtable, one lawyer admitted that their firm’s model and fee structures had effectively remained unchanged for the last twenty years, adding that there was no urgency to evolve because the market is still so large and they were still making so much money - something the partner called a “barrier to change”.
Another delegate suggested that in 20 years from now, there will be firms using more technology to provide a cost-effective service while the 10 per cent of people making vast amounts of money will have disappeared.
These sentiments echo the point we have been making since we started our business all those years ago. We aren’t saying that firms claiming to be moving towards an unregulated model don’t have the right idea - we’re simply questioning their motive. If they aren’t actually able to reduce fees for clients, what is the point in offering services on an unregulated basis in the first place?
(Funnily enough, no firm who has jumped on the ‘unregulated’ bandwagon has given their motive for doing so.)
In our opinion, slapping an ‘unregulated’ sticker on your business doesn’t automatically make it more “client-centric” and “forward thinking”.
If your clients will still be paying for the ivory towers that these firms sit in; if their bills will still account for the crystal champagne glasses on the unfathomably expensive boardroom tables, the luxurious armchairs in offices that go unused and the numerous golf days that are part and parcel of law firm culture; if you aren’t willing to change - not just in name but in how you operate - going “unregulated” is nothing but a meaningless rebrand.
In this case, you may as well stick a stock photo of a coloured umbrella amongst a crowd of black brollies on your site and add a tagline that states: “we’re different.” It’s great that you recognise the needs of the modern client - it’s just a shame you aren’t doing anything to meet them.
Unregulated services may be the latest trend that law firms adopt as a means of signalling their commitment to innovation, but once again, an inability to truly adapt in line with client demands makes this just another case of smoke and mirrors.
To find out more about the benefits of working with a virtual firm on either a regulated or unregulated basis, get in touch with our team and let us know your requirements. We have made a difference and with us you simply get great Solicitors, Barristers and overseas Attorneys at low prices, not because our layers are less qualified, but simply because our overhead is low.