15 April 2016

Law business model threat: big firms stride into recruitment agency territory

On Monday this week, top tier law firm, Minter Ellison, announced that they had just launched a contracting arm.

The Minter Ellison Flex website (‘The confidence to be agile') loudly proclaims:

Tapping into our diverse pool of talent - from three-year lawyers through to former General Counsel - working with Flex is an efficient and reliable way for clients to maintain or boost in-house legal resource capacity, offering continuity and quality of talent in temporary roles.

We pride ourselves on our integrated approach. Flex operates across Australia and is one part of Minter Ellison's broader service to clients. Our pool of talented contract lawyers have ongoing access to specialists, know how, training and support of a top tier firm.

On the Client tab you find out:

We cater for scenarios such as periods of extended leave, the need to rapidly add capacity, and temporary requirements for special projects - when only top quality, reliable lawyers who can 'hit the ground running' will fit the bill.

In other words, Flex is operating as an inhouse recruitment agency for clients.

Minters are not the first large law firm to move down this path in Australia.

Corrs have Orbit and Allen & Overy have Peerpoint.

Juliet Fay, the person responsible for Flex at Minters, appears to have no specific recruitment expertise, and from her current LinkedIn profile, appears to be a consultant to Minters, rather than an employee.

Tammy Mills, the person responsible for Orbit at Corrs, appears to have no specific recruitment expertise. 

Tony Corcoran, the person responsible for Peerpoint at Allen & Overy, appears to have no specific recruitment expertise.

It's unclear from a viewing of the respective websites, what additional full time staff each business has.

Being intrigued by this development, I contacted a few agency owners who specialise in the legal sector, or who have legal recruitment divisions, to seek their respective views.

A summary of their collective responses would be represented by this this quote from Liza Gazis, Managing Director of Mahlab (NSW) Pty Ltd:

"The move by Minters is indicative of a growing trend in the legal profession to offer clients end to end legal services, this is one of a number of services being offered as part of a bigger strategy. This trend started in the UK and a number of Australian law firms now offer such services. Whilst I would like a situation where all work was funnelled through to agencies this will never be the case. This is just another service provider albeit in a non-traditional form (and, one responding to client needs around changing workforce needs).

Mark Smith, Managing Director of people2people, made a point that had occurred to me as I read more about these new divisions:

Probably the most interesting part of this is the pitch by "Flex" to have lawyers register with them for work. The more senior, highly skilled legal professional is in short supply so unless they invest in active sourcing techniques I am unsure a link on a website will tap talent. Para legal or those with less experience are easier to come by but I wonder how many in house legal teams would approach Minters for this type of person when they can tap this market through their own connections really pretty easily.

Ultimately I think Minters are trying to trade on their very reputable brand. It reminds me of the moves made by the big 4 into recruitment for accountants in the 90's. Although they have great connections and some of the teams were successful, in most instances they have closed these departments as it wasn't their core business.

The focus of these law firms is to keep the client work inside the tent at almost any cost.

The big law firms know that their traditionally lucrative, charge-by-the-hour, business model is under threat from new and aggressively marketed service options, predominantly resourced in lower-cost jurisdictions.

The threat, and an example response, is starkly outlined on page 27 of the 2013 RBS white paper: A perspective on the legal market.

In our survey, 100% of respondents said that they expected the level of their firm's utilisation of legal process outsourcing (LPO) services to either stay the same or increase within the next 12 months, while 97% said that the level of back-office outsourcing would stay the same or increase.

In 2007, Clifford Chance launched a low-cost base, called The Knowledge Centre, in New Delhi, India. The magic circle firm became the first major firm to set up its own ‘offshore captive' legal process outsourcing operation.

In the 2012 annual review, the firm revealed that The Knowledge Centre provided support work to its legal teams in 27 offices outside India and supported on a total of 850 matters providing almost 50,000 hours of support to London, Singapore, Paris, New York, Amsterdam, Washington, Hong Kong, Milan, Dubai, Madrid and Abu Dhabi.

What does this mean for the recruitment industry?

Lisa Gazis articulates it succinctly:

I have been recruiting for a long time and the only thing that has not changed is the need to have..... a strong network of unique, highly sought-after candidates".

If the recruitment industry keeps its focus on this core strength then we will continue to have a very healthy future, much more healthy than some traditional top tier law firms, I suspect.

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1 comment:

  1. Helen Papas, Managing Director, Legal Personnel, Sydney20/4/16 12:08 PM

    Some of the firms offer “innovative services”, something similar to Flex and at the moment a number of firms seem to be on this bandwagon of offering additional services to clients.

    At Legal Personnel we don’t necessarily hold a negative view to the idea of Flex and it does show that major law firms are operating more like businesses than strictly law firm. And it is also possibly due to client demand to keep everything under the one roof, so to speak.

    Having said the above, the type of “high calibre lawyers” Minters says it will contract out to clients could be in short supply. One would wonder why these “high calibre lawyers” aren’t already gainfully employed.

    This model could, however, suit a lawyer who “wants a work life balance” and/or is nearing retirement.

    At the end of the day, I don’t know how successful Minters Flex initiative is going to be. The number of these “high calibre lawyers” might just be in short supply when push comes to shove. Unfortunately, it also doesn’t offer specialist legal agencies the opportunity to participate and provide contract lawyers as we currently do to some clients.