The fragmentation and reconstruction of the legal services market continues apace. The news that a large number of new "boutique" law firms are set to seek regulatory approval is not surprising. The old order is changing driven by the major changes affecting all sectors of economic activity. I have written before about the rise of the individual as technology enables people to make choices about when, where and how they work. The rise of the gig economy and the emergence and growth of legal services platforms are providing lawyers with an unprecedented range of choices.
This has important implications for lawyers and their clients. While barriers to entry may be falling and appearing to enable lawyers and others to start boutique law firms the reality can be different. Managing client money, choosing the right tech, ensuring compliance with rules, handling non-core practice areas and the need to put in place adequate professional indemnity insurance all take time away from the actual delivery of legal services advice to clients.
Many lawyers enter the profession as technical experts wanting to guide clients. A much smaller group of them actually want to run all of the back office of a firm, even if some components can be outsourced.
Similarly, regulators are unlikely to favour the creation of lots more small firms all requiring oversight. In financial services the number of financial advisory firms fell dramatically from 1980 to 2010 as the reality of regulation and the need to create economies of scale drove consolidation. Legal services is unlikely to be different over the long term. So the current fragmentation is enabling a reconstruction of the profession in a way that is more suited to modern economic realities, client and lawyer choices and the competitive forces of new entrants and new tech.
We are likely to see the emergence of new models that combine outsourced services, with business quality, risk management, insurance and regulatory support. In our small way we have envisaged such a world and created a way that enables the creation of the boutique without all of the downsides that maybe underplayed. It seems the market is still ripe for more change and provided quality standards are in place then both lawyers and clients stand to gain.
We live in exciting times...
More than 500 firms are expected to open next year as lawyers leave larger practices to go it alone, a business adviser specialising in the legal profession has said.