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One of the most noticeable developments in the modern legal services market has been the rise of the flexible resourcing model, where an organisation deploys lawyers as independent consultants and offers them to clients for projects on an “on-demand” basis. One cannot avoid citing Axiom and Lawyers on Demand as the most conspicuous examples (others are available).
This seems to be proving an extremely effective proposition, with organisations of this sort increasingly finding favour with the corporate market. The benefits are simple and well-versed. The model is (obviously) highly flexible and efficient, considerably lower in overheads than the traditional law firm and it enables lawyers to work in ways that suit their own lifestyle and career aspirations, thus opening up a diverse talent pool which might otherwise be inaccessible.
This is clearly a great thing for the marketplace in that it promotes buyer choice and efficiency, while widening career and lifestyle choices for lawyers.
This success has of course not gone unnoticed by traditional law firms and several of the larger ones have followed suit and set up their own individually-branded flexible resourcing operations. Part of their purpose seems to be to augment the resources of the firm in a flexible, low overhead way to assist in meeting fluctuating demand. This clearly makes eminent sense. However, the position is a little less clear cut when it comes to offering services directly to the principal firm’s clients, in direct competition with them.
From a buyer’s point of view, faced with the choice between engaging a partner and associate on a large project on hourly rates and using a pair of equally-skilled contract lawyers at a lower, fixed price the latter option would win every time, for obvious reasons. As a buyer, I would question why all my work couldn’t be carried out on this basis, not just the longer term projects or on-site placements that these services are pitched towards. Same quality, lower price is a rather compelling proposition.
It would be interesting to see how the law firm would respond to such demands. Certainly I would not expect them to justify any price differential on the basis of any skills or expertise gap between fixed and contract lawyers of equal experience. Indeed, in promoting their contract lawyers as particularly commercially-attuned so as to be able to integrate with in-house teams, they might tempt one to question whether this hints at a lack of such commerciality in their other lawyers.
It may be that the only real explanation is the difference in the firm’s direct costs in executing the respective approaches. This takes us back into the inward-facing territory of using cost instead of value to drive pricing, an approach that is increasingly being rejected by influential buyers in the marketplace. A quote published last year from the GC of Telefonica illustrates this well: “We are no more interested in a firm's basic unit of sale than we would be in our local pub landlord’s relationship with the brewery. All we care about is the overall cost of the round of drinks.”
It is easy to see why it seems attractive to law firms to be seen to be moving with the times and offering a varied range of modern, fashionable solutions, but caution is needed in differentiating these offerings if they are to avoid the risk of highlighting the deficiencies of their primary business model. The empowered buyers of the modern legal services market are no longer shy of looking under the bonnet and asking challenging questions. Let the seller beware.
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