Fixed fees, senior service, outsourcing: is that enough to make Radiant shine?
10 January 2011 | By Matt Byrne
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The technology boutique that launched last week with lawyers from Barlow Lyde & Gilbert (BLG), Latham & Watkins and Morrison & Foerster (MoFo) is considering radical plans that would see its associated business take over an in-house legal function.
The ambitious move chimes with the firm’s statement that its legal arm is a ’trailblazer’ in the legal market, although it does echo Berwin Leighton Paisner’s Managed Legal Services division.
The firm, Radiant.law, includes former BLG partner Andrew Giverin, Latham partner Alex Hamilton and MoFo partner David Skinner.
It claims to be particularly innovative thanks to its preference for fixed fees over hourly rates and its use of offshoring via legal process outsourcing provider Pangea3. Its business model also eschews the traditional pyramid system that uses ranks of assistants in favour of using only senior lawyers.
It added last week that it is the first firm to embrace Richard Susskind’s vision of the legal market’s future, as detailed in his book The End of Lawyers?, by combining process-driven work and the use of technology to deliver services handled by senior lawyers, coupled with a push to drive down costs via fixed fees.
Throw in the fact that the Legal Services Act will be implemented in full this year, paving the way for alternative business structures, and it is tempting to see Radiant as one of a new wave of law firms using the current changes in the market to their advantage.
Skinner is convinced that this is enough to set it apart from the pack.
“In the big firms we all came from, everything started from the billable hour and then worked around that,” he says. “We’re not starting from that point. We’re much more interested in looking at the value of the work, the output of the lawyers and the result, not just sending a bill because someone spent 10 hours on a matter.”
However, the news of its launch and its style has been met with immediate scepticism and not a little scorn from some in the market.
“Since when is fixed fee a new concept?” asks one reader on TheLawyer.com. Another posts: “There’s nothing innovative about this firm.”
One rival technology lawyer admits that Radiant looks like an “interesting” proposition, adding that using Pangea3 appears to be a genuine attempt at cost reduction. But he argues that the firm’s biggest problem is likely to be sustaining its model.
“In technology in particular the barriers to entry are quite low,” says the lawyer. “The problem is sustaining the business and remaining viable. It’s easy enough to set up a firm like this, and with the credible names it’s likely to get a big tide of goodwill. But how likely is it that they can turn that into a sustainable business?”
The biggest barrier to growing a business built along these lines, the lawyer adds, is the fact that it is not taking on assistants.
“How far can they scale up their time?” the lawyer asks. “There’s only a finite amount of work the current lawyers can do in any given day and they’ve said they aren’t going to scale up by using junior lawyers.
“Also, there may be a limit on how much they can outsource because there’ll always be a proportion of the work where clients want the value added by using the senior guys.”
As for the use of fixed fees, the consensus in the market is that this is simply a response to the structural changes happening in the legal market, which basically means taking out costs in service delivery.
“Saying that they’re the first to embrace Susskind’s projections is certainly an eye-catching way of describing their new firm,” continues the lawyer. “But I’m not sure it’s accurate that it’s the first, and there doesn’t appear to be anything dramatically innovative about it.”
One of the firms closest to Radiant in structure and market focus is Technology Law Alliance (TLA), which was launched in 2003 with an equally impressive roster of lawyers hailing from businesses such as Capgemini, Slaughter and May and Wragge & Co.
TLA director Jeremy Newton admits that for the kind of work his firm handles there is no need for the massive overheads of the larger firms.
“It’s worked tremendously well for us,” adds Newton. “And it’s a very exciting time to be launching something new in this area.”
That said, in the eight years since it launched TLA has barely grown, at least in terms of headcount.
On the other hand, if Radiant does acquire the in-house legal team of a bank or major corporate, then TheLawyer.com readers may be forced to eat their words.
Radiant’s lawyers admit that any deal of this kind would be at least a couple of years down the line, so for the moment the only basis for judging whether it is as radical as its name is by analysing its business model.
Few clients would argue with that.