20 February 2012 | Updated: 20 February 2012 8:16 am
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First LawVest got investment from DLA Piper. Now it’s aiming for cradle-to-grave legal services - and it’s got 12 silks to sign up
As a journalist, it’s not often that you get commercially pitched to during an interview. But this is exactly what happened when The Lawyer met LawVest’s principals last week. Chief executive Karl Chapman, the hyperactive face of the soon-to-be alternative business structure (ABS), ended the meeting with enquiries about the legal services The Lawyer’s parent company Centaur might require.
That upfront approach may have recommended LawVest to investors, one of which is DLA Piper. Indeed, it was the latter’s involvement that first drew the attention of the market last autumn. When the firm announced last year that it was going to become a strategic partner in LawVest and that Sir Nigel Knowles was going to sit on its board, it prompted intense interest, even from managing partners who were disdainful of commodity plays. But with the sketchiest of information out there, some assumed that LawVest was more of a marker than a market entrant.
But there is no soft launch to LawVest. Today (20 February) it is going live with the boldest-ever post-Legal Services Act move involving the bar. A small company with big ideas, it has signed up no fewer than 43 barristers, of whom 12 are silks.
Riverview Chambers is going to offer direct access to the bar to domestic and overseas companies with a fixed-fee model on a coordinated scale; it has recruited a range of counsel with expertise in employment, environmental, health and safety, compliance, family and IP law.
It is a model that effectively cuts out swathes of solicitor involvement, and one that poses a direct challenge to law firms advising under-resourced in-house legal teams at both listed companies and small and medium-sized enterprises (SMEs).
Chapman says it is “the biggest single opportunity I’ve seen in 20 years”.
Chapman and chief operating officer Adam Shutkever like to talk about disruptive models within the market. Indeed, their very language – peppered with phrases such as ‘customer service’ and ‘the value chain’ – is of conventional business rather than professional services. Chapman’s background is entrepreneurial: he left fund management at the end of the 1980s to set up recruitment and training business CRT Group and in 2001 set up AdviserPlus Business Solutions, which provides HR, employment and health and safety advice to SMEs and listed companies and which owns LawVest. Shutkever, the smoother, more reserved of the two, studied law at university and then qualified as a barrister before working as an investment banker at SG Warburg & Co and Deutsche Bank and as chief financial officer at Accord.
Chapman’s experience at AdviserPlus convinced them that the current private practice model is inadequate.
“Look at the partnership model and its thinly capitalised balance sheet,” says Chapman. “And you have to ask, would you get those margins in a normal competitive marketplace?”
Indeed, he jokes that his best marketing tool to clients is the average profit per equity partner (PEP) table in The Lawyer UK 200 Annual Report.
AdviserPlus is a minnow in turnover terms: according to Companies House, its turnover in June 2010 was £5m. Chapman claims turnover now is now nearly double that. It advises businesses on HR, employment and health and safety issues on a white-label, fixed-fee basis. As far as Chapman is concerned, this is a classic area where lawyers – who 10 years ago might have been the first port of call for compliance, standard contracts and employment hotline support – have missed the boat.
Indeed, AdviserPlus’s competitors are either publishers such as Croner, which creates advisory materials, and other employment services companies such as Peninsula Services, which claims to have around 24,000 clients around the country, or payroll outsourcers such as Capita.
The Riverview offering applies this logic to the legal market. It will charge £200 per month for businesses with up to five employees to £500 for those with up to 50. This includes advice, document preparation and correspondence in any dispute up to commencement of proceedings. Chapman and Shutkever are pitching prospective clients a starter membership of Riverview through the MyView online library service.
“Look,” declares Chapman. “Content isn’t king. It’s what you do with it that counts.
We’ve provided a complete legal library at no cost to the market. We looked at hiring employment law practices and rejected it on every occasion because the cost model was top-heavy and the service orientation and the end-to-end technology wasn’t there.”
The structure has had to be finely calibrated for regulatory purposes. Riverview Law, the trading name of LawVest, is the sales, marketing, customer service and technology business that contracts with Riverview Solicitors and Riverview Chambers to offer legal services. (The latter entities have been registered with, and are regulated by, the SRA and Bar Council respectively.) As the holding company, LawVest is applying for ABS status later this year.
The barristers who have signed up with Riverview (see box) will remain members of their own sets, a model that has echoes of door tenancy.
“It allows members to remain in their existing chambers,” explains Jonathan Caplan QC, head of 5 Paper Buildings. “Riverview acts as an effective procureCo [procurement vehicle] marketing us to corporate clients around the world and to high-net-worth individuals.”
Riverview Solicitors will instruct members of Riverview Chambers like any normal client. So far, so familiar. But Richard Lissack QC, head of strategic development at Outer Temple Chambers, who as director of business law has been pivotal in setting up Riverview Chambers, insists that what LawVest is doing is unique.
“It provides businesses with an option for barrister-led advisory work and representation within a single organisation with a solicitors function, underpinned by a larger organisation that provides block contracting services,” he says. “And it’s backed by significant funding and the highest level of IT – and a marketing budget that most sets would kill for.”
The key element is a fixed-fee package for business clients – with no exceptions.
“Say someone phones Riverview asking for Richard Lissack to advise on financial services compliance,” elaborates Lissack. “I’ll be asked to provide some idea of cost, for me and if necessary the broader team. So if it requires a junior and a law firm, I have to work out together with [Riverview Chambers chief executive] Chris Baylis what it will cost. Then we’d present a single price.”
He adds that he is free to bring in other barristers and solicitors to the team; they do not have to be signed up to Riverview, but they do have to provide their services for a fixed fee.
“As long as they come and play for the same price,” says Lissack, “you can use anyone you like.”
“It’s going back to what barristers are good at,” contends 5 Pump Court Chambers’ Simon O’Toole. “Charging a brief fee and that’s it.”
“Many barristers don’t have the infrastructure to handle direct access, but the bar has huge advantages,” elaborates Chapman. “They’re self-employed, the overheads are low and they understand fixed pricing.”
While the market has been moving towards fixed fees for some time, many private practice lawyers still argue that in-house clients in particular are wedded to the billable hour because of its familiarity – and the fact that easy-looking discounts can be had. LawVest is staking its entire business model on the assumption that the move towards fixed fees is an unstoppable trend and including the bar in an end-to-end service offering.
“This will release [clients] from the uncertainty of billable hours with large firms,” declares Caplan. “I see procureCos as being a necessary and additional resource for the bar. Large firms will need to rethink billable hours and the cost of litigation, as there are going to be put in place alternative effective structures that will be able to do the lot. For most corporate clients, even the most high-net-worth individuals I’ve represented, cost is invariably a matter of concern. That, and being able to get to the right senior counsel and adviser speedily.”
Most lawyers argue that predicting litigation costs is impossible. Nonsense, says Chapman, who argues that having fixed contracts allows LawVest to take a different approach, and that if his lawyers take a bath on one case it is not the end of the world.
“We can take a portfolio view in terms of risk management and litigation management,” he explains.
Riverview Solicitors is hardly the killer app, however. None of the barristers interviewed was overly familiar with that part of LawVest’s business, although 3 Pump Court Chambers’ Alison Russell points out that her employment team has worked with AdviserPlus.
There is no escaping the suspicion that Riverview Solicitors functions as support to the direct access procureCo of Riverview Chambers. For O’Toole an arm’s length relationship works just fine.
“Most of my work comes from insurance panel solicitors,” he says. “I know they have various relationships with insurance companies, but I’m not privy to those relationships – it’s of no concern to me.”
Shutkever and Chapman pursue the line that Riverview Solicitors – run by Adam Reeves and based initially in the Wirral, but which is likely to open in Yorkshire – is integral to LawVest and will grow at the same rate.
Lissack argues that a solicitor arm is absolutely necessary.
“Let’s say an overseas bank wants me to advise it in connection with a claim in the High Court,” he says. “They might come to me directly. But say it needs a letter written urgently to the other side. I have to say, ‘I can draft one for you to send, but I can’t actually send it.’ Well, you can hear the exasperation at the other end of the telephone, or even the email.
“[Having access to a solicitor] is a useful adjunct – for instance, taking statements in cases, which barristers are pretty bad at. If you’ve got the facility in-house it makes sense.”
Riverview Solicitors’ links with DLA Piper, through the latter’s investment, could jump-start its development.
As DLA Piper joint CEO Nigel Knowles told The Lawyer last week (13 February), the relationship works both ways.
“It allows us to say to clients that we don’t do this work anymore, we’re not geared up for it. But rather than turn you away we can say we’ve taken a strategic stake in the business that does handle this work and we can introduce you to LawVest,” he said.
Many of the participants believe the clerks are relaxed about it, seeing it as a work generator, but it is understood that different barristers will come to different arrangements with their clerks.
“In the current legal market we need to have as many clients as possible,” states O’Toole. “From what I’ve seen of their business, they can probably open a number of doors with company and corporate clients.”
“This isn’t rocket science,” says Chapman. “But a lot of the old certainties and the way law firms are structured are falling away at the moment.”
The multiples that the business-savvy Chapman and Shutkever are putting on LawVest’s growth over the next two to three years are a statement of intent and underline the pair’s ambition. They are also mouth-watering for investors.
Put it this way, Knowles – who knows a thing or two about building a business – won’t be losing sleep about losing his investment.
Jude Allen 1 Hare Court – family
Chris Baylis Chief executive, Motor Industry Legal Services
Eleanor Bruce 3 Pump Court Chambers – family, crime and civil
Nawazish Choudhury 5 Pump Court Chambers – civil practice (including consumer credit), contractual disputes, property and personal injury and credit-hire cases
Ivan Clarke 5 Pump Court Chambers – civil, construction, professional negligence, property, landlord and tenant, personal injury
Hannah Connors 3 Pump Court Chambers – employment
John Donald 218 Strand Chambers – financial services disputes
Timothy Dracass 3 Pump Court Chambers – employment
Adam Gadd 3 Pump Court Chambers – criminal and civil
Daniella Gilbert 3 Pump Court Chambers – civil and criminal
Nicholas Griffin Five Paper Buildings – inquiries and investigations, public, litigation, serious crime (including fraud)
Peter Harthan Riverview Chambers
Spencer Keen (left) 3 Pump court Chambers – employment, discrimination and human rights
Jennifer Lee 3 Pump Court Chambers – common law including family
Tara Lyons 3 Pump Court Chambers – family and civil
Roderick Moore 3 Pump Court Chambers – employment law and family finance, professional/sports disciplinary hearings
Gary Morton 3 Pump Court Chambers – employment (including all aspects of discrimination and collective labour)
Simon O’Toole 5 Pump Court Chambers – common law (particularly property and professional negligence)
Charles Parry 3 Pump Court Chambers – common law
Heather Platt 3 Pump Court Chambers – employment and discrimination
Rachel Platts 1 Hare Court – family
Simon Purkis 3 Pump Court Chambers – civil, family and criminal
Gareth Roberts Linehall Chambers – criminal and fraud
Alison Russell 3 Pump Court Chambers – head of employment
Richard Sear 1 Hare Court – family
Sir Peter Singer 1 Hare Court – financial dispute resolution
Gavin Smith 1 Hare Court – family
Rachel Spicer 1 Hare Court – family
Helen Trotter 3 Pump Court Chambers – employment and family
Richard Wald 39 Essex Street – environmental and planning
Iain Wightwick Unity Street Chambers – landlord and tenant, personal injury
Pitch perfect: the LawVest way
For businesses with up to 50 employees
Unlimited access to the Riverview Law legal team during business hours, including all advice, guidance, document preparation and reviews, plus management of all correspondence and solicitors’ letters in any dispute up to the commencement of proceedings, after which a fixed-price quote is provided separately:
0-5 employees – £2,400 annual contract (£200 per month)
6-24 employees – £3,960 annual contract (£330 per month)
25-50 employees – £5,988 annual contract (£499 per month)
For businesses with up to 1,000 employees
Uses Riverview Law’s ‘Legal Counsel Analyser’ to establish what services a client requires in addition to core service scope. Once this is captured, a detailed fixed-price proposal is prepared. The scope includes full legal support in most business matters and management of all correspondence and solicitors’ letters in any dispute up to the commencement of proceedings, after which a fixed- price quote will be provided separately.
If a business of up to 1,000 employees enters into an annual contract and in the first month the service does not live up to expectations, the contract will be cancelled and the money refunded immediately, without quibble.
Director of clerking, 39 Essex Street
It is truly no longer ‘business as usual’ in the legal services market. The launch of LawVest’s Riverview Law will I am sure make some of the non-believers stand up and take notice. As many will know, one of the owners of LawVest is DLA Piper.
Elements of the bar have had their doubts as to whether ProcureCos will work in practice. The bar’s leadership is committed to the concept, and so they should be.
Riverview Law is the first of a new generation of legal business ventures. It will be the procurement vehicle that provides work to Riverview Solicitors, which will in turn instruct members of Riverview Chambers, an independent set of barristers’ chambers.
The members of Riverview Chambers will retain their existing chambers memberships and so the day-to-day administration of their practices will continue as normal through their established clerks. In fact, this arrangement is in many ways no different to the established door tenancy arrangements that have existed for many years.
There has been an increasing trend of clients taking ownership of all of their legal service providers through panel arrangements. These arrangements will only increase in the same way that they have for solicitors.
Riverview Law is in many ways an extension of this type of arrangement. However, Riverview Law aims to provide an holistic approach to its potential clients through its arrangement with Riverview Solicitors and Riverview Chambers. Its goal: budgetary certainty through fixed-priced contracts.
The arrangement will provide a new stream of work to those barristers involved, which will complement their existing arrangements.