How law firms are diversifying their revenue streams

Any aspiring lawyer will be keeping a close eye on the Big Four accountancy firms slowly but steadily making inroads into the legal services market. However, law firms have made their own forays into other markets, including those typically reserved by accountants, in an attempt to cross-sell alongside their core legal services offering.

This has been encouraged following de-regulation by the Solicitors Regulation Authority, a move which offers firms’ an opportunity to distinguish their client offerings and create new revenue streams.

The area of law which is prone to exploitation in this regard is tax, where traditional law firms typically advise on the planning and financial issues that arise incidentally to the legal advice they provide. For example, Pinsent Masons has previously promoted multidisciplinary practice within its tax team through a series of hires with HM Revenue & Customs experience. Over 30 per cent of the team is now comprised of non-lawyers.

What’s more, this is becoming increasingly common. For example, many firms have entered the management consultancy market, developing management consultancy offerings to complement their existing sector strengths; Addleshaw Goddard and Eversheds both launched professional practice consultancies in 2015.

Similarly, RPC established RPC Consulting in early 2015 as an independent provider of actuarial and general management consultancy services to clients in its core insurance sector. The business integrated several lateral hires from bespoke insurance consultancy, Marriot Sinclair, to establish a depth of expertise to supplement the firms’ legal expertise in the sector. This allows RPC to provide insurance clients with a ‘one-stop’ shop service with the firm marketing the move as “the next stage in RPC becoming a broad-based City professional services firm.”

This shift may be possible following the Solicitors Regulation Authority’s changes to the Separate Business Rule, approved by the Legal Services Board in November 2015, permitting law firms to deliver non-legal services when doing so is in clients’ best interests and such services could reasonably be expected to be provided. These changes open the legal services market to further diversification following the much scrutinised Legal Services Act 2007.

While these changes have yet to be fully borne out they are providing firms’ with greater flexibility to meet client demands. Some firms have integrated complementary services entirely into their business model: privacy law firm Schillings’ cybersecurity and risk consulting services are leveraged to provide holistic reputation management services to clients.

Ultimately, some aspiring lawyers could find themselves in legal practices which are comprised just as much of non-lawyers as they are lawyers, an alien concept even a decade ago. This provides opportunities, as law firms seeking to widen the remit of services they provide will be looking for aspiring lawyers with broader skill sets to complement this, whether in management, insurance or otherwise.

Suneet Sharma is a law graduate and paralegal.