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I have in the past expressed exasperation on these pages at the sensationalisation of legal news. It is not without some hesitation, then, that I have chosen to write about what I feel is the most significant development yet to be seen in the legal services market in the post-Legal Services Act era.
I am of course referring to the recent announcement of the acquisition of Riverview Law by EY. I do not describe it in these terms because it signals intent by EY (or any of the “Big Four”) to take steps into the legal services market. Although not insignificant, this process has been under way for some time and will no doubt continue.
In my view, the most significant aspect of this development is that the market has finally seen, in no uncertain terms, an event of credible, independent validation of the effectiveness of the modern, client-centric approach to delivering legal services, which Riverview has defined and led since its launch in 2012.
Before I go on to illustrate this, I should mention the inevitable speculation about financial performance, it having been noted by commentators that the latest set of published accounts paints a less than impressive picture. I can add no insight on the financial background, but I do know that the Riverview business is based on investment in securing long term, multi-year subscription-based contracts with large blue-chip corporate clients. This comes at an up-front cost but brings with it significant, sustainable benefits for the future. First, it creates secure and predictable contracted revenue streams for several years ahead. Secondly, it enables contracts to be underpinned by a brand and service-delivery capability designed to make itself integral to its customers, creating dependency on functional effectiveness, rather than individual personal relationships.
These characteristics create a financial robustness that makes for a more attractive and sustainable investment proposition than the relatively fragile traditional model. (I suggest a momentary pause here to reflect on how this looks if you replace the term “PEP” with “wages”, perhaps a truer reflection of reality). Needless to say, the fact that EY has chosen to make this investment speaks rather more loudly than the views of this commentator.
So, what do I mean when I refer to this modern “client-centric” way of providing legal services?
Of course, every provider will tell you they care about their clients and indeed most of them do. But actions speak louder than words. Since its inception Riverview has advocated an ethos to which it has stayed faithful throughout, which is quite simply to put its customers at the centre of the design and evolution of its business model. Unlike any other organisation in this market, it set out from day 1 with an unwavering focus on defining value from a client perspective and then seeking to develop a model to deliver services, profitably, in line with this.
The best and most prominent illustration was its decision to loudly and proudly eschew the billable hour. Standing by this has involved swimming against the market tide and genuinely taking risks in the pricing of work, not by reverse-engineering hourly charges but by putting faith in its ability to make efficient use of people, process and technology. Failure is inherent in this approach - risks are risky, and don’t always pay off - but it simply leads to learning, recalibration and improvement.
Another significant day 1 benefit has been the focus on data. Since inception, Riverview has made it a priority to capture data, refine it into management information and use it both to improve its own effectiveness and to provide business insight to its customers. It should be borne in mind that day 1 took place back in February 2012. Most traditional providers haven’t even reached day 1 yet, as they still grapple with what data to collect, how to collect it and what they’re going to do with it. The value of Riverview’s work in this area will not have been lost on EY.
Similarly, the subscription-based business model means the prevailing ongoing business objective is to secure renewals. Success requires commitment, energy and focus on truly understanding customers’ needs, working to create value, to integrate seamlessly with and ultimately become indispensable to clients and their in-house legal functions. When we talk about alignment of incentives between provider and customer, it is hard to think of a better example. The result of six years of relentless focus of this sort is a deep and valuable body of knowhow and, in my view, despite their sophistication EY are now acquiring a significant expert capability that they did not previously have.
In contrast, I do not think this is much of a legal technology story. As has been publicised, the Kim software offering is not part of this deal, save for the 10-year licence to continue to use it. I have written before about the important distinction between the advanced use of technology and the use of advanced technology. Application of technology should follow the development of effective processes which in turn requires a commitment to the people responsible for implementing them. In supporting this evolution - rather than being the evolution itself - technology becomes a low-visibility wrapper around a service delivery capability and, if it’s working, is literally taken for granted. Here, Riverview have got their priorities right, with the Kim proposition having arisen from the externalising of the end product of this evolutionary process.
As I have mentioned, this deal is a high-profile and emphatic validation of the new model legal service provider. It has shown that, despite years of market scepticism, it is possible to be successful in this market by running a legal services business focused on clients, not lawyers, with expert non-lawyer leadership and without reliance on the billable hour.
This development can only accelerate the already growing adoption by the market of non-traditional providers as well as provide a further wake-up call to the incumbents to add more purpose to the incremental improvements we have started to see in recent years.
In the meantime, I can only congratulate the Riverview Law team for so boldly setting out their clear vision and sticking to it, despite many doubters and some rough waters along the way, and deservedly achieving such a successful outcome, and one that most would have considered completely implausible back in 2012. Knowing Karl Chapman (Riverview’s CEO) as I do, I suspect the journey is far from over. Things can only get more interesting.
Jeremy Hopkins was Head of Operations at Riverview Law from 2012-2015. He is currently a Senior Legal Project Manager at Baker McKenzie.
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