How to do employment law differently: Driving down costs for clients and empowering lawyers

After 20 years as an employment lawyer, I thought: “there must be more to working life than this.” (i.e. ever increasing hours; ever increasing fee rates and ever increasing disgruntlement among staff). I also thought: “if, as someone who advises on the law of work, I can’t figure out a better way of working, then I can’t be much of an employment lawyer.”

The result is Constantine Law, a thoroughly modern law firm, providing employment and business immigration advice to corporate clients. We have radically reduced our rates (I charge my main client less than I did 12 years ago, how many lawyers can say that?); staff work remotely and are empowered through high commission rates to win and do client work: We have slashed our overheads to make the firm more profitable. But let’s be clear: the main beneficiary to our new way of working is the client.

Our approach stands in stark contrast to most of the profession. Law firms are failing to move with the times:  they are failing to use smart IT to drive down costs for their clients; they are failing to use smart office solutions and technology to empower their staff; they are failing to engage imaginative external providers to find new solutions. The result? The unit cost of production remains too high; hourly rates are thus too high (and pricing generally is not imaginative enough). Most critically, staff are unhappy with their work/life balance, particularly partners and want-to-be partners. In turn, this feeds through to the quality of response and to staff engagement.

The good news is that there is a different way: provided that law firms embrace radical change by using the latest IT and smart external solutions to put the client first.  

First, I explain how we got here.

Traditional Law has two big problems: (1) cultural; and (2) financial

1. Cultural Challenges to Innovating  

I have worked in two large national law firms. Both suffered from a top-down management structure where partners had no real “say” in the business. The real problem, however, was cultural: the employment department was a “bit part player” in the firms, as a whole. This meant it was impossible to innovate properly. The time-lag between idea and action was always months, sometimes years. It is impossible to deliver innovative services to clients in such an environment.

I have worked in two smaller firms. They too had similarities: they did not have the time to think strategically about employment law matters and had no business immigration capacity.

The solution? Excluding very big international firms, the future is in high performing specialists: firms with dedicated, senior people who are obsessed with researching and delivering clear solutions to meet a specific client need. This is all the more imperative given the very urgent and turbulent times that we live in.

2. Financial Challenges to Rewarding Partners and Staff

For Partners

I wrote previously that the traditional pay structure for rewarding non-equity partners in law firms is fundamentally unfair and outdated.  The traditional third-third-third model cannot be justified (partners earn a third of what they bill; one third is overhead and one third is profit to the partnership). In two years of trading Constantine Law’s fixed overheads are less than 10% of its turnover.

We work to a lean business model:

(a) we have negligible non-productive overhead (no bloated support departments or unproductive partners);

(b) we don’t carry fixed office costs: we meet in London’s leading business space. Clients and staff love it);

(c) all of our key support functions (IT, PA/Admin, Marketing) are outsourced to specialists.

This enables us to reward partners with double the rate of the traditional model. Omer Simjee who recently joined as a partner used one word to describe it: “empowering.”

I feel truly motivated to go out and win work, for me and my family.”

Partners work remotely: they see more of their families. They are happier. The model is particularly good for working parents.

And whisper it quietly: “no more management cr*p.” No more pointless internal meetings. We have a highly-focussed monthly CRM meeting chaired by an external specialist. Partners win the work, they do the work. Simple.

For Staff

What percentage commission do you get on bringing in a new client to the firm?” I asked an associate solicitor, who I trained, and is now working at a respectable firm in the City. Answer: “3 per cent.”

At Constantine Law, we pay our employees 25% commission on new work that they bring in. Entrepreneurship should mean something choate: too often, firms pay lip service to it.

More fundamentally, our staff work remotely: unless they are working at either: (a) client offices; or (b) the Clubhouse.

What does this mean? Using cloud computing, Caroline Glacken, our senior associate can do two productive days’ work from a villa in Brittany without taking holiday.

Don’t be Fooled by New Models Offering the Same Service

Various firms are setting up at present, offering new ways of working. Some will offer a number of the benefits listed above. Some big firms are claiming to offer “agile working.” The reader should not be fooled: some new firms may set out to ensure that lawyers benefit through: (a) higher “take;” and (b) more freedom/remote working.

However, a law firm only truly re-engineers its service when the client benefits – i.e. through an improved service and a reduction in rates). Too few firms are passing on the reduction in their overheads to clients.

The Bottom Line

The bottom line is that all of our solicitors are evangelical about working for Constantine Law. Two years ago we started with 1, now we have 6 and others are joining. It is a better way to service clients and to live a healthy life but it is not for the faint-hearted…

This working life is not for everyone: only the brave need apply

All bar one of our solicitors and support staff are self-employed. The “catch” (if you can call it that) is that solicitors have to generate their own income. My message is clear: “If you are a net contributor to your firm, you will be better off here.” (The opposite also applies). Therefore:

  • Lawyers need an appetite for risk: to seize the moment and be genuinely self-employed (as opposed to “faux” self-employed like most Schedule D partners). However, I say that the greater risk is staying in a broken model, a combination of IT and new service providers will sweep away old-law in the years to come. “Do nothing” is the greatest risk of all.
  • Lawyers must want to have happier lives: I meet so many partners in firms who are fundamentally dissatisfied with their day-to-day working lives. Many are simply batting out time until retirement. Given that we work, on average, 10-12 hours per day, there must be a better way for highly skilled professionals to live. How we work impacts on our health and on our relationships. My view is clear - there is another way: provided that we are brave and want to seize the moment, and…
  • The client must be the ultimate beneficiary:  First and always.

This article first appeared in The Lawyer Monthly (04 July 2017)

John Hayes is the Principal and Founder of Constantine Law and an employment lawyer who advises UK corporates in the financial services, recruitment, tech and construction sectors