Allen & Overy’s (A&O) contract lawyers arm Peerpoint is the largest revenue generator of any law firm-linked flexible working service, with a UK revenue of £25m in 2017/18, it can be revealed.
Peerpoint’s rapid growth since launching five years ago is a clear indication of a change in sentiment towards the use of contract lawyers and alternative legal services providers (ALSPs) more generally. Its financial results are included in this year’s UK 200 report for the first time in a ranking of some of the market’s largest ALSPs by their UK revenue.
The new data includes Axiom’s UK revenue of almost £50m (£49m) and PwC’s UK legal services revenue of £70m, a figure revealed by The Lawyer over the summer that would put it at number 53 in the main UK 200 list.
It also includes estimated UK legal services revenue for around a dozen alternative providers such as EY and KPMG, Exigent, Elevate, UnitedLex and LOD.
As this year’s UK 200 report confirms, many of these businesses are firmly in growth mode. Peerpoint has boosted the number of lawyers on its books by more than 50 per cent over the past year and is currently targeting overseas expansion, with New York and Frankfurt launches particularly in its sights.
Its growth underlines the maturity of several New Law businesses, a theme echoed by the report which highlights some of the year’s key events. For example, this was the year when EY made its shock announcement that it was buying NewLaw stalwart Riverview Law.
As EY partner Matthew Kellett tweeted that day, “So, we’ve acquired Riverview – you weren’t expecting that. Watch this space – lines are being drawn.”
The lines may be being drawn but they are also blurring between NewLaw and the growing number of traditional firms that have their own related flexible offering.
The best-known (not including the legacy BLP-owned LOD) include Peerpoint, Pinsent Masons’ Vario and Eversheds Sutherland’s Agile. All are now thought to be significant revenue generators for their respective firms although none would go on the record about the level of fee income.
The Lawyer estimates Vario contributed around £7m in 2017/18 of the £8.3m total generated by Pinsents’ NewLaw revenues (comprising a mix of Vario, diversity consultancy Brook Graham, legal outsourcing start-up Yuzu and online compliance solutions business Cerico, which it sold to Dow Jones this March).
Director Matthew Kay said the past few years had been a “period of transition” both for Vario and the contract lawyer business, but that this was just the start.
“We’re in for another busy period, and there’s likely to be further consolidation in the market,” said Kay. “There’s an ever-greater adoption of freelancers and contractors, that market is roaring ahead. We’ve seen substantial growth and the pace is increasing.”
Peerpoint’s managing director Ben Williams confirmed that EY’s acquisition of Riverview highlighted the growing maturity of a range of NewLaw businesses.
“We’re coming to a stage where a lot of the entrants have built up credible businesses and are looking at what comes next,” said Williams. “You struggle to scale. If you’re a client you can go to all sorts of places these days but a growing number like the idea of coming to one place for all sorts of service. It’s helpful to them not having to manage a portfolio of providers. That can be wasted effort and quite hard work. Clients are sophisticated but having an element of simplicity never hurts.”
In what is a period of significant activity for PwC’s legal operations it also recently launched its own flexible resourcing arm, called Flexible Legal Resources (FLR).
“We now have a bench of around 1,000 lawyers on FLR,” revealed PwC’s UK legal group head Ed Stacey. “With the PwC brand coupled with the quality of the people we have, we feel it’s a premium service.”
In contrast to these law firm (or accountant)-linked contract lawyer providers, several of the best-known standalone businesses are surprisingly small in terms of revenue. Halebury has around 45 lawyers and a UK turnover of £4m but founder Janvi Patel said it is gearing up to be as much as 80 next year, with an expected corresponding doubling of revenue to £8m.
“We’re getting 50 CVs a month and we take three,” said Patel. “Lawyers are looking for a different way of working, more career management, the right fit. Also, clients are demanding it. We have more than enough work to fill that need.”
Similarly, Obelisk founder Dana Denis-Smith confirmed the growth in the market and underlined the reasons why it was critical for a business such as hers.
“Our offering has always been for very large corporates where quality control is key, so we needed enough people who were good enough to work in that environment,” said Denis-Smith. “The catalyst came from a meeting with the GC of one of the big banks, back when we were around 100 people. ‘That’s too little for me’ said the GC, so we ramped up recruitment. I brought in more people to process more people. That conversation made me realise the opportunity on the client side, and that to push the business out to lawyers beyond the M25 we needed much bigger scale and more capacity.”
Obelisk now has the largest legal talent pool in the UK with 1,500 lawyers from City law firms or the in-house teams of large businesses.
The UK market now features a growing number of alternative providers that provide a growing roster of services such as consultancy and e-Discovery.
Exigent, for example, is on a roll not least because of its use of tech and broad client base of corporates and law firms. In its most recent financial year total revenue was up by 46 per cent globally with around 35 per cent year-on-year growth in the UK. The latter contributes some 28 per cent of total revenue, or around $15m (£11.6m).
Exigent CEO David Holme said the business was seeing “a significant surge” in business across all of the jurisdictions in which it operates including Canada, the US, Australia and the UK.
Another operation that has until now been largely under the radar in the UK is managed services provider UnitedLex. That changed last month when the firm secured a $500m investment from European private equity giant CVC, thought to be the largest investment in the legal market ever.
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