Fieldfisher Condor launch highlights booming law firm consultancy market

Fieldfisher’s announcement last week that it has expanded its Condor automated documentation platform to South Africa serves both as confirmation of the success of this alternative legal services initiative and as a pointer to the emerging market for law firm-related consultancy businesses.

Fieldfisher revealed that it has launched a managed legal services centre in South Africa through a new partnership with legal services provider Cognia Law. This deal follows a similar launch earlier this year with Indian business process outsourcer eClerx.

Fieldfisher launched Condor Alternative Legal Solutions in January 2017 as a way of offering clients a flexible and customisable range of price- and process-efficient services. It is the brain-child of derivatives partner Luke Whitmore and utilises resources both in India and Belfast to produce the documentation.

The services it offers include trading and commercial documentation negotiation outsourcing, large-scale documentation project delivery and technology-assisted solutions including data extraction and analytics, contract automation, AI and robotics.

The firm said that the combination of skills and services enables it to deliver a range of services and skills encompassing legal expertise, contract expertise, project management expertise and processing expertise all within an integrated law firm wrapper.

While Condor is initially focusing on the derivatives and securities financing markets, future plans include expanding its range of services beyond financial services and to offer it to clients across all sectors of the firm.

The firm’s Condor initiative, which is headed by former Ashurst partner Chris Georgiou, is highlighted by Fieldfisher managing partner Michael Chissick in this year’s UK 200: Top 100 report, which includes a focus on law firm consultancy arms following a growing number of launches in recent months (see below).

Chissick said the Condor business had “exploded”, winning a string of new mandates.

“It wouldn’t surprise me if this will be a huge part of our business in a few years,” added Chissick.

Another recent law firm-related consultancy launch is Clyde & Co’s smart contracts consultancy, known as ‘Clyde Code’, which advises insurers and clients in other sectors on all aspects of smart contracts, blockchain and distributed ledger technologies.

A Clydes team led by UK insurance and reinsurance partners Lee Bacon and Nigel Brook is operating from London, San Francisco and Dubai in relation to the consultancy and has partnered with blockchain specialist Gary Nuttall, who operates his own financial services sector-focused consultancy.

Clyde & Co’s plan is to tap into the appetite in the insurance sector and offer something new.

“We believe we are the first to do this,” Bacon said. “We’re working mostly 50 to 60 per cent on insurance and reinsurance matters. We believe in the benefits of smart contracts and blockchain tech. If there was a tech made for the insurance market it would be this.”

Click view a PDF version of the Law Firm Consultancies analysis or read an extract of it below.

Shrewd sidetracks

Are law firm consultancy businesses worth the bother? Or to put it another way, are they generating enough revenue to make setting them up worthwhile? Certainly the UK market has seen a proliferation of law firm-linked consultancies in recent years, with a myriad of models targeting a range of sectors.

consultancies
Source: The Lawyer UK 200 2017

Research by The Lawyer for this year’s UK 200 confirms that a significant number of law firms are now offering non-legal consultancy services, either provided in-house off the back of hires or via taking a stake in an existing business or by setting up a partnership with an external consultancy. For the first time, this year’s UK 200 survey has attempted to assess the size of this market. The annual survey included a question which, in contrast to the highly detailed nature of those relating to traditional law firms, simply asked firms to tell us if they operated a consultancy or not.

Twenty-three per cent of this year’s UK 200 firms that responded to the question (144 firms in total) confirmed they had at least one consultancy. Hogan Lovells alone operates four. The responses to the UK 200 show that the biggest proportion (38 per cent) of firms with consultancies are those with a turnover of £200m or more. With 16 firms answering the question in this bracket, that means six are now running some kind of associated consultancy. At the other end of the top 100 ranking, only 13 per cent of firms (five of 39) in the £22m to £50m bracket reported having launched a consultancy. The trend line seems clear: the larger a firm’s turnover, the more likely it is to operate an associated consultancy.

At the other end of the top 100 ranking, only 13 per cent of firms (five of 39) in the £22m to 50m bracket reported having launched a consultancy. The trend line seems clear: the larger a firm’s turnover, the more likely it is to operate an associated consultancy. And this makes sense, as the number one reason cited by most firms for launching these consultancies is that they allow for the provision of a wider range of integrated services to clients (see below). The bigger the firm, the deeper the bench of skills and services.

That said, 23 per cent of the Independents that answered the question (64 firms) said they did have a consultancy, suggesting that a significant minority of firms (15 respondents) in The
Lawyer’s second 100 ranking are actively seeking ways of broadening their range of services to clients and differentiating their practices in the UK legal market’s most crowded
battleground.

From the smallest beginnings

For this year’s report we did not ask firms to provide details about revenue derived from these consultancies, although several did offer this information during interviews. Likewise,we did not ask for headcount, although again some firms did offer this information.

And in those interviews with firms that operate one or more consultancies a relatively consistent picture has emerged. The level of revenue these additional arms are generating suggests that this market remains in its infancy, at best. Rivals from the Big Four accountants or the likes of McKinsey, PA Consulting and Accenture are unlikely to be overly concerned as of now.

“It’s pretty tough going,” admits Fieldfisher managing partner Michael Chissick. “We’re not giving up the day job of legal services just yet.”

Law firms and their consultancies - a list 2017

Indeed, indications are that the majority of these businesses currently measure their revenue in the hundreds of thousands rather than millions, with the hoped-for volume and turnover simply not there, at least not yet. In short, most of these embryonic consultancies currently resemble little more than a nice add on.

For the moment at least, law firms’ consulting arms tend to be small, non-core and relatively tiny in terms of revenue generation.

But while it might be early days, The Lawyer’s research does confirm that a significant number of this year’s top 200 firms now operate some sort of consultancy offering services and
advice in areas other than law. And the range is both growing and surprising.

Services offered by firms include HR, PR and marketing, data protection, regulatory and government issues and technology, notably cyber security. And new entrants to this apparently
burgeoning market are popping up all the time.

Among the most recent is Pinsent Masons’ majority stake in diversity and inclusion consulting firm Brooke Graham this summer, while the firm also recently took a minority stake in Yuzu, an in-house-focused New Law business launched by former Colt general counsel Robin Saphra.

The idea behind these consultancies is simple. They offer law firms the ability to provide a range of integrated and related services that provide clients, in theory at least, with a one-stop shop. They are designed to provide an alternative source of income and, ultimately, create competition with other independent advisers for the advisory fees on a range of non-legal services matters.

As RPC’s director of brand and talent Clint Evans points out, there is currently a multitude of business models out there with no one size that fits all. He argues that the market boils down to
two areas: consultancies that advise on big business change and those that advise on continuous business improvement.

consultancies-2
Source: The Lawyer UK 200 2017

Where Evans thinks law firms might score is in areas where they have a unique grasp on a particular market, or understand the nuances of how lawyers work. At the heart of RPC Consulting is its proprietary software, Tyche, sitting alongside an actuarial consultancy.

“Risk management is possibly best looked at from the perspective of lawyers,” adds Evans. “Ours is a separate offering to insurance clients from legal but it sits nicely in a law firm.”

The big question he believes is whether or not law firms are genuinely reversing some of the Big Four traffic. “It only takes a small business adjustment for the Big Four to take quite a lot of work from law firms,” says Evans. “It’s a lot harder for law firms to make a dent in the Big Four.” That said, Evans insists that the scale of RPC’s ambition is significant. RPC Consulting launched just two years ago but now has a staff of around 70 and a revenue understood to be several million, possibly as much as £10m. Evans believes that in time it could represent around 10 per cent of RPC’s overall
business.

“This will not be a sideshow,” he adds. Similarly, Fieldfisher’s Chissick recognises the need to
develop something that competes with the big consultancies, but concedes his firm so far is “miles away”.

“We’re not competing head-on,” he admits. “For us, it’s primarily still an add-on to legal. It’s early days. I’d say it’s not yet an outstanding success but it’s also by no means a disaster.
Certainly, clients do like the integrated offering. It removes a lot of argy bargy.”

For more information about the content of The Lawyer UK 200: Top 100 report please contact Matt Byrne on 0207 970 4558 or matt.byrne@centaurmedia.com. To purchase any of the UK 200 series please contact either Gilberto Esgaio on +44 207 970 4191 or Gilberto.Esgaio@centaurmedia.com or Letitia Austin on +44 207 970 4662 or letitia.austin@centaurmedia.com.