Why law firms have left consulting to accounting firms over the last few decades is a mystery. Accounting firms quickly moved up the value chain and are viewed by clients as strategic partners leaving law firms behind. But Law Firms really should get into the consulting business as evidenced by the fact this morning’s news from thelawyer.com that Eversheds Sunderland’s consulting business brought in over GBP 26 million ($33 million) in 2017. Given that, here are 5 reasons law firms shouldn’t leave consulting to accounting firms:
Grow Revenue and Demand for Services. Study after study shows that demand for legal services has been flat since 2011. One obvious way to offset that stagnant growth for legal services is to offer other legal related services like consulting. Eversheds Sutherland’s consulting businesses are broken into 4 pieces.
ES Consulting, which helps in-house legal teams increase efficiency and enhance their services through technology and project management.
ES Advisory, which is an HR consulting and corporate risk and compliance service. ES Agile an interim lawyer provider covering short-term tasks for clients in a more flexible way.
ES Ignite is a managed service offering that uses technology to scope new projects and help in-house teams outsource high volume, low risk work.
Evershed’s move into “consulting was both a response to the influence of the Big Four and the emerging market of alternative legal services providers.”
“The increasing revenue of our consulting arm is driving interest into the new ways that law firms can respond to a shifting market,” The success of Evershed’s consulting business, which started in 2010, is a good blueprint for law firms.
Become an Alternative Legal Service Provider (“ALSP”). At first law firms tried to pretend that ALSPs didn’t exist. Then law firms tried to minimize the impact ALSPs were having on their business. But a recent post by thelawyer.com makes clear that ALSPs are significantly taking revenue from law firms. ALSPs stand out to corporate clients because of their process and technology expertise: (a) they are focused, (b) they can move and respond faster, and (c) higher quality. Most corporate clients are laser focused on efficiency gains, quality, and speed. They speak the same language as ALSPs. In a recent post at Bloomberg’s Big Law Business blog, Integreon’s Chief Revenue Officer talked about the tremendous growth opportunities for ALSPs, particularly with corporate legal departments directing partnerships between ALSPs and the law department’s law firms and accounting firms. This is one of the reasons accounting firms have been buying up ALSPs in 2018.
Efficiency. Clients have been clamoring for years that they want their legal service providers to be more efficient and corporate legal departments want help figuring out how to be more efficient. What better way to meet the needs of clients AND be able to position the firm in the marketplace as a thought and practice leader in efficiency?
Move Up the Value Chain and Provide a More End-to-End Solution. Law firms have traditionally been put on their heels to prove the value they provide to the client. By providing additional legal-related services through a consulting arm, law firms finally have a way to be seen as true strategic partners with a seat at the senior leadership table.
Stickiness. By providing those additional legal-related services, law firms will have more stickiness with clients. The same way the accounting firms have been able to position themselves as indispensable. A client using the law firm’s HR Consulting services, for example, will find it hard to use a different law firm’s employment lawyers when it’s far easier and efficient to use the law firm that has the HR Consulting service. This is why accounting firms have significantly grown their lawyer ranks over the last decade.
Law firms shouldn’t leave consulting to accounting firms. Law firms looking to move into legal-related services have a few choices:
They can start their own consulting subsidiaries from scratch;
They can acquire existing consulting companies and ALSPs (like Nimble); or
Each has it’s positives and negatives but we think the latter 2 are quickest way to scale and achieve a positive return on investment.