UK legal market adopting 'consulting' model to boost growth

The last decade has seen consulting firms pushing into the legal market, to eat into the market share of traditional competitors. In response to this, however, a new form of legal business has come to the fore – the platform law firm – and according to a new report, these firms are adopting consulting models to grow their headcount and revenues at an accelerated rate.

The legal services market has undergone significant structural change in recent years. The world’s four largest professional services firms have pushed ever deeper into the legal market – using the same tactics the quartet of accounting giants deployed in their conquest of the consulting industry (ramping up their legal headcounts organically, and via a large acquisition drive).

In the early stages of the new shift into legal, some researchers estimated that if KPMG, Deloitte, EY and PwC were even “a fraction as successful in law as they were in consulting", they could soon win a combined 5% share of the legal market’s global income – with a combined revenue boost of more than $30 billion. And by 2022, research from Thomson Reuters, suggested those prophecies might be manifesting themselves. Major corporations were apparently “snubbing traditional law firms” while increasingly turning to consultancies and accounting firms for legal advice.

The disruption has not only been one-way however. Legal firms have adapted their offerings in a way that has counteracted this spread of professional services firms into their space – and this has led to the rise of new challenger business models that are staving off the consultants. Leveraging new technology and methodologies, the emergence of the ‘platform law firms’ has been highlighted in The Platform Firms Report 2024.

Published by Codex Edge – a research company with access to a fully comprehensive dataset across more than 15,000 firms – the paper analyses law firms, lawyers, practice areas and specialisms using real-time legal data and insights. And this year, the study has found that platform law firms, which leverage consultancy-inspired models, are growing their headcount at a significantly faster rate than their ‘traditional’ competitors.

That model is relatively simple. Consultants bill clients for work and the firm provides administrative support. According to Codex Edge, this eliminates hierarchy and billing targets, allowing for a streamlined operations model. Generally, it works on a split fee basis, “where fees paid by the client are shared between the regulated firm, the lawyers that service the client and the lawyer that introduced the client”. Typically, this sees “around 50-80% goes to the lawyer and the originator (if different), and the balance to the firm.”

This model has helped to attract large numbers of staff to law firms who might have otherwise looked elsewhere. As a result, law firm Setfords was able to increase its headcount by more than 80 experts, while Spencer West and gunnercooke also managed to expand by 50 professionals.

“It’s really positive to see the continued growth of the platform law model,” said Guy Setford, CEO of Setfords, speaking on the findings. “We’ve always been dedicated to driving innovation in legal service delivery. Being named the top hiring firm of any law firm in the UK is truly a momentous occasion for us. It just shows that this model not only works but is fast becoming the first choice for many lawyers.”

In turn, with more capacity, platform law firms managed to boost their revenue growth. Bexley Beaumont for example enjoyed a CAGR of 50%, and Spencer West of 38%. Other notable performances at 20% and above came from Excello and Setfords.

Bexley Beaumont CEO Karen Bexley added, “We are delighted that Bexley Beaumont is leading the way for compound annual growth, especially given our selective and strategic recruitment process. We have never aspired to be the largest firm by numbers, so are pleased to be recognised in the top 10 of absolute growth also. The fact we rank so highly is a testament to our different approach and this is what makes Bexley Beaumont attractive to lawyers.”