LegalBusinessWorld Posts

The Rise of the Freelance Lawyer

February 6, 2018

Law firms have employed contractors and freelancers in many areas of their business for decades, especially in information technology, strategy and business consulting, HR and support services but they have been slow to recognize the need for highly qualified legal freelancers for themselves. As one head of HR for a leading US firm suggested the concept of the old school locum lawyer has tarnished the reputation of interim lawyers and therefore getting partners to buy into the idea of engaging with freelancers has been a struggle.  In fairness old school locum lawyers have really nothing in common with the new breed of highly qualified legal freelancers.

 

 

The Future

Some more progressive law firm managing partners estimate that between 20% to 40% of their entire legal workforce will be freelance within 5 years. The legal media probably devotes as much as 80% of their coverage to two interconnected topics, artificial intelligence and technology’s impact on the workforce, the rise of the freelance lawyer.  Yet both subjects equate to a fraction of 1% of the entire $1 trillion industry.

 

If you take all of the lawyers supposedly on the books of all of the freelance and contract players in the global market we are still looking at less than 7,500 people.  When you consider that many are signed up with multiple providers the number will be far less.  The total number of registered lawyers in the UK, Australia and US is close to 1.5 million.  We are only talking about freelancers servicing Biglaw and corporates as if you factor into account all of the sole practitioners they could represent as much as 40-50% of the market. However, consumer marketplaces such as Lexoo, Law Path, Rocket Lawyer and Legal Zoom have all created opportunities for the wider legal market and also new career paths for former corporate lawyers looking to set up on their own and indulge their entrepreneurial spirit.  Legal freelance marketplaces such as Upcounsel and Crowd & Co have sprung up to service both the freelancer and the ‘corporate’ client.

 

Outside of the legal industry the notion of freelancing has been around for a long time and with the advent of retail marketplaces such as Freelancer and Upwork there is plenty of work and plenty of people looking for it.  Law is finally joining the Club.

 

The Current Market

Axiom, founded in 2000, is probably the oldest of the current crop of LPO’s, alternative law firms, law companies, and flexible resourcing business where contract legal services are fulfilled. However, there is a considerable difference between being an employed lawyer, even on a ‘0’ hours contract at axiom, where you will be contracted out to different clients when work is available, to a true freelancer who will often operate under their own limited company and importantly has to market themselves to find work.  Law companies such as Elevate also provide high quality alternatives for lawyers to traditional law firm and in house models but freelancers are completely independent.

 

A true freelancer is their own boss in every sense of the word, they get to pick and choose work, and they invoice that work themselves. They are not tied to any particular client or office and are just as likely to work offsite than on it.  In many instances a freelancer is driven by lifestyle, necessity and the continuous enjoyment of legal practice but away from a structured and permanent environment.

 

Of course freelancers may choose to sign up to multiple providers such as Peerpoint, LOD, Vario, Agile, Integrate or Obelisk and even to multiple recruitment agencies to find work but there is no guarantee of work or that they will earn the same amount for each project.  It is possible for a freelancer to have more than one ‘gig’ at a time and sharing their hours amongst a variety of clients.

 

The world of freelancing ranges from commercial lawyers earning around £250 per day to ex magic circle lawyers commanding over £1,200 per day. In Australia the market has moved up for mid level lawyers and flattened at the top but pricing is more competitive in the more advanced markets of the UK and US.  Demand is strong from clients and the issue of supply remains consistent for all, freelancing is still a nascent market.

So why do freelancers leave the comforts of a paid job, consistent work, resources and support, great clients and hopefully some good friendships with colleagues.

 

Emerging Career Paths

Historically there were few career paths for lawyers, and mainly because it was a career for life, however, it is accepted today that a high school leaver could have as many as 10-12 careers over their lifetime. When I qualified over 25 years ago there was a choice of either working within a law firm, being a sole practitioner or working in house in anything from the Government to bulge bracket global investment banks and everything in between. Options were frankly limited and the alternative was to leave law entirely. As a former legal headhunter for over sixteen years I would often see lawyers leave the profession even when they still enjoyed the practice of law as the working environment left them with few choices and their desire for a more entrepreneurial career was nagging at them.  This was the same across the globe.  

 

Options for women re-entering the profession after raising children were nearly non existent before the likes of Obelisk were created to support their return to the workforce. Flexible working and freelancing has thankfully made legal work far more accessible to returners and re-engaged an enormous tranche of well qualified and motivated female lawyers.

 

The chances of making partner in Big Law (think Amlaw 100 and the UK equivalent) are being touted as being as low as 4% so it is not surprising that there is little incentive to hang around waiting for partnership even if the carrot is a whopping seven figure income. Traditionally these lawyers would move in-house, possibly be made Counsel or leave the industry, which is an enormous waste of intellectual capital.

 

In 2017 the opportunities around the legal industry are enormous. You no longer need to be a lawyer to work with or supply the industry, and many lawyers have turned to successful careers as entrepreneurs in and outside law, in technology and the wider business world.

However, for those who enjoyed the practice of law but do not want to pursue the traditional paths becoming a freelancer is a viable alternative even if just to take a breather and assess options.  New law models such as Halebury offer the best of both worlds, providing support, structure and the ability to generate your own business which you are directly rewarded for.

 

The Market Drivers

The growth of the freelance lawyer marketplace is being driven by the twin factors of economics and technology which have combined to radically alter the landscape for the business of law and the delivery of legal services.  

 

Economics has led to firms being quieter than usual and the continued pace of people leaving coupled with the lack of headcount growth has led to firms not recruiting for replacements especially at the senior end.  It is at this senior end that the freelance market has expanded most rapidly. Highly qualified lawyers still enjoying the practice of law and being available ‘off payroll’ to their old law firms masters. 

 

While technology and economics are with one had dismantling the old practice of law they are enabling an entirely new way of engaging the legal workforce and at the same time the delivery of its services.  Law firms and lawyers will either profit or plunge depending on how they perceive and adapt to the markets. 

Technology has enabled us humans to be better connected, have better access to information and services, and to build businesses leaner and faster then ever before. That enables everyone, lawyers included, to seek different opportunities and provide a degree of safety when heading off into the unknown world of freelancing.  Entrepreneurship is not for the faint hearted but you can set up a new business in 24 hours with a website built and be client ready.

 

There is a constant drive to increase revenue and profitability which in Biglaw can really only be achieved by growth and you do not need to look very far to see firms with stagnant or dwindling PEP to see partners march out of the door for greener pastures.  Firms are trimming the fat as much as they can by not replacing lawyers as they leave, they are trying to innovate and are building near shoring centres all of which are admirable, save money, make them leaner and more agile but when you compare that to the world of manufacturing there is only so much that you can cut back on in the process before you are left with less quality and less profit. 

 

In the business of fashion, if a consumer no longer wants to pay $500 for a dress then you can cut your production costs, trimmings, packaging, freight, fabrics, design, warehousing and you can increase profit but you are never going to maintain the same brand quality, you either go smaller and boutique, or you go mass market and increase volume at lower margins. The same applies to law firms.  

 

There have certainly been whispers that many managing partners are privately admitting that their firms are quieter than they should be, that utilization rates can be as low as 80% in some groups and that workflow across firms as a whole has not really recovered post recession.

 

When looking at low utilization rates and inconsistent work flow you have to congratulate pioneering firms such as Pinsent Masons for launching their pilot which allows lawyers in some groups to pitch for work across their global portfolio.  They are at least striving for change.

 

The market for freelance lawyers was initially driven by law firms sensibly recognising that they could resource matters differently and tap into a highly qualified talent pool but one which would sit off their payroll.  Clearly the contract lawyer offerings of Allen & Overy, Pinsent Masons and Berwin Leighton Paisner have all expanded overseas and morphed into a more diversified business aimed squarely at the wider corporate market.

No doubt there is great debate within the top thirty UK firms as to how and when they enter the race and whether they need to do so. Linklaters decided to opt for Obelisk to manage their contract services and DLA partnered with LOD.

 

Driving change in the law firms

This conversation revolves around necessity, priority, experience and cost. Naturally law firms have little or no experience in contingent workforce planning, they see setting up a LOD rival as being prohibitively expensive.  It does need to be but there is that perception. Necessity is really only relevant when a very senior partner at the firm realises that the firm will either sink or swim or that they can create an opportunity while their peers are still talking. 

Very few firms see this as it could be seen which is growing a new revenue generating business unit, investing in their futures and creating more career paths for future lawyers rather than simple labor arbitrage.  They have not yet completely grasped the need to re-shape their business and that the world of freelancing solves a number of their problems.

 

Law firms have tended to see freelance businesses in a linear fashion just to resolve their talent pool issues by moving to a contingent workforce. Whereas the accountancy/audit based consulting firms such as PWC who have generally led their law firm peers in creative thinking recognize that it is both a business necessity and a human one. In fact PWC recently announced the launch of their legal freelance business “Flexible Legal Resources”. 

 

The human angle is one which law firms understand logically but struggle to really accept and poses the question will law students still want to work for law firms in five years. The belief amongst the leading international players is that there will always be talent and there is a school of thought which says that perhaps the leading 20 – 25 elite transactional and advisory based firms will survive as they are but maybe a bit leaner. They will continue to recruit the brightest and best graduates but even now these numbers have been dwindling amongst the UK elite. However, they have picked up for their US counterparts in London though I imagine that this is little more than positioning rather than anything more dramatic in the market.

 

If one assumes that law graduate numbers will decrease over time as the profession moves onto a more multi-disciplinary industry offering roles with less concentrated emphasis on legal technical skills and more business skills such as project management, business development, technology enablement, emotional intelligence, creative and critical thinking, then the law schools will continue to service the elite firms with ‘lawyers’ and also service the wider industry with legal entrepreneurs and para-lawyers.   The industry will then continue to get the influx of talent that it needs to survive and thrive.

 

So where does this leave the freelance market?

If you can imagine a law firm operating at 80% utilization then accept that sooner rather than later you will need to rationalize that workforce, either by a significant headcount cut, a re-distribution of the workforce or engaging them on a contingent basis. Enter the freelance lawyer again and here is a stream of people who may still enjoy the practice of law but want a more flexible solution, they may not want to be a partner, or have the right skills for partnership but they still provide a valuable legal service albeit on better terms. They can maintain their quality of work, have variety, a strong and stable client base and stay relevant with the potential to earn a very high day rate.

 

It has certainly been mooted that rather than mass redundancies it is possible to offer those otherwise retrenched lawyers continuous engagement with the firm by moving them to contractor status. Of course this is, as I say, still moot but the status of freelancer provides an additional alternative to HR departments of law firms and corporates grappling with 

reducing headcount.

 

In my podcast interview with Jarred Hardman, CEO and founder, of Australian legal freelance marketplace Crowd & Co, Jarred suggested that for every one permanent lawyer a firm could have a pool of up to 20 freelancers to draw upon.  The firms can build their own talent pool or dip into his. Crowd & Co already have 600 freelancers on their books in Australia alone. 

 

The danger is ensuring that these people who move to a different work arrangement are not all going to be your future leaders. The most adventurous will want to re-engage with their creativity which may well mean starting a side gig or setting up on their own either in or outside law.

 

The freelancer can serve several purposes for the law firm or corporation. They offer a flexible ‘off payroll solution’ to manage the ebb and flow of work, they offer a more robust technical skill set at a lower cost than the traditional law firm salaried lawyer, they can be used to mitigate the lack of partnership or career prospects or senior roles by engaging with them earlier in their career.

 

The conventional law firm partner argument for not engaging freelancers is that they are seen as cannibalizing their own business and not empowering it. As the old partnership model still enables partners to run their own fiefdoms and they have tended to hire people to not challenge their way of thinking but support it. This attitude makes more financial sense, at least to them, to maintain the status quo and ride off into the sunset with their pockets brimming with silver. 

 

The savvy partners see longer term growth and profitability, more efficiency and less management.  Take the example of a lawyer who commands £800 per day as a freelancer, the smart partner sees that as an opportunity to charge them out at maybe £3,000 plus per day, which is a very tidy profit for very little effort.  The law firms can second out lawyers who are still excellent technically and commercially, they keep and develop the client relationship yet retain their best lawyers for themselves. They are not losing £500 per hour of billables for a secondee.   Corporations can engage with highly qualified freelancers as their workflow changes and can better manage their budgets based on demand.

 

However, all of this presupposes that people, human beings not assets or resources, want to work in this way and while other industries such as financial services, accounting, design, marketing, consulting, IT and technology have all embraced this way of working, lawyers are traditionally conservative and it will take a while longer for the gig economy to really take off in the legal industry.  Let us hope that this new world of opportunity coupled with a drive to have a more balanced purposeful life enables lawyers to stay within the profession and support it rather than to leave it.

 

About the Author

Ed has been working with and helping people in one form or another for over 25 years.  He brings with him extensive and varied experience of working around the world in different industries and cultures. Starting his career as a barrister in London in the mid 1990's, Ed became a headhunter over 20 years ago. He moved to Sydney in 2001 to set up his first legal recruitment business EA International.  Opening EA's Delhi office in the mid 2000's at the time when our client Clifford Chance was pioneering alternative legal services a few miles down the road in Gurgaon.  

 

He sold EA in 2010 moving back to England with his next business a Saas recruitment platform and community for financial and professional services which had roots in behavioural profiling.  Returning to Sydney in 2012 Ed started consulting to SME's and technology start ups in Asia while embarking on a personal journey of awareness brought on by a fluke discovery of cancer. 

 

Taking time out to repair and recharge Ed learned about nutrition, meditation, human behaviour and how to change disruptive patterns - to enjoy a more simple and uncluttered life. 

 

Within a year he and his wife founded a fashion and e-commerce business later moving to the rice fields of Bali to be closer to their factories and to practice a healthier way of life. 

Ed has just returned to Sydney having been in England since 2015 where he has advised businesses and law firms and continues to mentor people going through change. 

The Human Consultancy was borne from the knowledge that regardless of technology business is built on its people and that people need to come first, to be nurtured and respected and that their career, interests and needs will change over time.

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