Posted On: 14th June 2012
Chris Owen explains how ABSs can serve the Bar as other external pressures force a culture of change Legal Services Act (LSA) brought with it some fear, indecision and confusion for many sets of chambers around the country that were unsure as to what to do, where to position themselves within the marketplace and how to take best advantage (if at all) of everything that the Act provides.
Digesting the basic advantages the Act bestowed on the legal profession was not easy at first and drove some larger, more affluent sets to employ consultants to assist them in the interpretation of how far they could go to reposition themselves within the emerging and new marketplace.
St Philips chambers, where I work, chose not to do that but we did form a strategy committee at an early stage to discuss the pros and cons of different suggestions and we set up an early procureco company sitting alongside chambers to offer alternative dispute resolution services, which has worked very well and is a combination of Clementi and Nick Green (former chairman of the Bar) thinking. Many more such vehicles are in the offing and will be more unique and ground breaking once announced.
Catalyst for change Across the Bar structural change is necessary, as envisaged by the Act, to enable full advantage to be taken of the opportunities which now present themselves such as the employment of professional support lawyers and finance staff which seems a given. Even the role?of the traditional barristers’ clerk is under threat as more chambers decide to merge with a law firm, form an alliance here?and there with other professional services providers and grow the model into more of a one-stop-shop legal provider.
Solicitors and PSLs employed by a chambers begin to change the whole dynamics of the hitherto understood relationship between a barrister and his solicitor client. Going to the source of the work rather than waiting for it to come in is not so much a product of the Act itself but a desire on “Will barrister’s chambers take advantage of the opportunity to?have an outsider invest in chambers? I do not see this happening, as I cannot see an exit plan for the private equity house or wealthy private investor” but some went quickly, unable to take the heat or simply unable to adapt to the culture of the Bar. Some remain.
Today many sets have a well-regarded senior clerk with operational control of?his or her clerks’ room as before, and an administrator and CEO are also employed, each bringing the skills necessary to manage multi-million pound businesses and, along with the senior clerk, providing a more seamless service both internally and externally. The advent of non-lawyer owners is an obvious step therefore under the LSA, subject to the percentage limitation of ownership which the Act lays down. I cannot say many barristers make great managers, only a few do.
In the majority of ABSs which are formed to provide legal services I would be staggered if the CEO is not a non-lawyer. Impact on the service user To me this is the thrust of the LSA; there was no point in the Clementi review of how we were providing legal services unless it was to give the client more choice and give law firms and barristers chambers a bit of a shake up. What are the main benefits therefore to the man on the Clapham Omnibus, the corporate or anyone else? Choice, price?and service come to mind. Sometimes by a process of commoditisation, sometimes not. Many are already making the traditional firm and chambers sit up and engage with them to do SLAs, or operate under a different banner like an ABS.
Many chambers are way ahead of the game, scouring nationally for deals in a way in which before the LSA they would not. Many are creating procureco type structures and modernising the ways in which they offer some of their services. Some are speaking directly with law firms and others as to how they can offer joint services to their clients and that will normally be through an ABS model. I predict a few even more dynamic chambers will disappear altogether and create an entity from which they will operate that has not been seen before. We live in interesting and challenging times and, now that the hitherto rather sleepy Bar has woken, be prepared for some surprises. the part of some chambers to make the?Bar stand out more at a cost-efficient price.
What I believe the Act did was to accelerate many chambers’ thinking as to where?the next loaf was coming from and the downturn in publicly funded work made that debate much more urgent. Cultural change is also happening. Service level agreements within an ABS? are much more demanding and tighter in what they expect from a barrister. Some are struggling, I am sure, to adhere to those standards, until one day the set that did the deal is let down by a barrister who has sat on the papers for ten days after they were due back. One slip and the contract, which those administering the process will have signed up to, can be undermined and at worst cancelled by the laziness or ineptitude of a fellow member of chambers. So, while, in a normal chambers model, the demeanors of one member of chambers would have affected the practice and income of one barrister, under an ABS everything is more highlighted and under scrutiny and can affect all others. Panels within the ABS will cause friction. If a part of chambers decides to form?an ABS alongside another organisation?or on its own, it is highly unlikely that every barrister who considers themselves as part of a particular practice group in chambers will be selected for the ABS. This is down to several factors: market forces, what the client wants, stricter SLAs as just mentioned, price and reputation for clients/ user friendliness. This is bound to cause friction within a chambers but is a product of the more corporate approach and client comes first intentions of the LSA.
Will barrister’s chambers take advantage of the opportunity to have an outsider invest in chambers? I do not see this happening, although I may be wrong, as I cannot see an exit plan for the private equity house or wealthy private investor. I can see a clear incentive for a law firm to take in extra investment on a number of levels. Take the common one where the partners get too senior and have to be bought out, which can stifle any further investment?in the growth of the firm – by taking an investor in as a shareholder, much-needed capital is released to expand the firm. Time will tell whether the anticipated influx of hedge fund money and other funds does materialise. It will also be interesting to see if those law firms that announced that they will consider flotation on the stock market decide to go ahead with such plans. Unless a specialist chambers decides to join forces with such a law firm, and all members of the chambers become partners or directors in the LLP or ABS, I cannot see these opportunities affecting the Bar much.
Running the set Chambers management has long been?the sole province of experienced senior barristers’ clerks, trained from a young?age by a more experienced clerk until they themselves take over the mantle of running the set. Later on (maybe 25 years ago) administrators arrived, employed to split the senior clerk job and allow one to run chambers operationally, and the other to manage the premises, suppliers, payroll and so on: an ideal combination in many sets which thrives today. However, in the late 1980s a few sets engaged professionals from many different backgrounds who had the title chief executive. Ground breaking for the rather crusty, fusty image of the Bar but of course way behind other professional service organisations such as accountants who had long since been run by such professional managers. Resistance at first was replaced by a sneaking respect which a few earned,