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A growing number of barristers are modernising the way they do business, particularly as financial pressures rub the shine off the traditional chambers model.
Common factors seem to be a desire to reduce overheads, become more market facing, and develop business models which allow them to be more competitive in the legal services marketplace. Some also have an eye on creating capital value.
The Bar Standards Board has made great strides to facilitate this entrepreneurial activity, by giving regulatory freedom to form entities. The take-up so far has been steady but unspectacular. Most have been incorporations of self-employed practices of individual barristers, where the barrister is sole owner of the entity or joint owner with their spouse.
The few chambers that have embraced the concept have largely sought to replicate the traditional chambers model, with associated barristers remaining self-employed and central overheads funded by way of fee contributions.
Our belief is that things are about to change radically and quickly. We anticipate the emergence of genuine ‘Bar firms’ that emulate solicitors’ firms. These Bar firms will employ staff and barristers, their stakeholders will share risks and rewards, and, over time, they may attract equity investment and capital value on sale. How then might Bar firms benefit from the experiences of their law firm cousins?
Working with law firms over many years, we have seen the collective power of a group of individuals working together with a view to profit, and how the pooling of resources and intellectual capital can bring out the best in each individual. But sharing risk and reward is likely to be an alien experience for many barristers. Some may be enticed by the prospect but find it hard to take the required entrepreneurial leap, put hard-earned cash on the line and accept the uncertainties of collective decision-making.
Keep the core ownership tight. It is best to have a small number of similar-minded, risk-oriented individuals owning your entity vehicle and find other ways to incentivise and reward others.
It is rare to see a new law firm set up in any other legal form than a limited liability partnership or limited company. It is likely that most Bar firms will adopt the same approach for their trading entities. As law firms introduce non-lawyers (mainly professional managers and equity investors) as owners or managers, there has been a strong growth of SRA Alternative Business Structures. As barristers follow suit, there is likely to be a similar growth in BSB Licensed Bodies.
Take specialist accountancy and legal advice on the best legal structure for your entity.
It is not uncommon to find that the business model initially proposed is not viable. It is usually possible to restructure to bring it clearly within regulation, or to take outside the scope of regulation altogether.
Take specialist legal advice on the regulatory status of your proposed model to avoid wasting time and money.
However exciting a business model may appear, financial forecasts with realistic sensitivity analysis are essential.Get them stress-tested by external accountants experienced in the legal sector to help temper unrealistic optimism.
Know your numbers inside out before taking steps to formally engage with stakeholders, funders and other third parties.
Barristers within chambers are adept at managing conflicts of interest. Once sharing profits as LLP members or co-shareholders, sophisticated conflict management protocols are essential.
Run exhaustive tests to make sure future conflicts can be identified and will not hole your entity below the waterline.
Some external funding will probably be required. This will be debt, equity or a mixture of both. The key to getting the mix right is understanding the drivers of the funders and their impact on structure and operation of the entity.
Be clear on what type of funding is needed and seek to align the interests of owners and funders.
Nigel Wallis is a Director of O’Connors Legal Services Limited, an award-winning firm of lawyers and business advisers that blends corporate, commercial, insurance and regulatory expertise to help clients manage risks and opportunities – wherever in the world they are doing business. We specialise in advising individuals and organisations operating in the UK legal services sector and have represented well over 100 law firms, barrister groups and chambers, claims management companies and legal sector funders. We are at the forefront of legal services regulation and have worked on some of the most innovative and significant ventures in the sector. For further information, please contact Nigel Wallis at nigelwallis@oconnors.law or visit www.oconnors.law
A growing number of barristers are modernising the way they do business, particularly as financial pressures rub the shine off the traditional chambers model.
Common factors seem to be a desire to reduce overheads, become more market facing, and develop business models which allow them to be more competitive in the legal services marketplace. Some also have an eye on creating capital value.
The Bar Standards Board has made great strides to facilitate this entrepreneurial activity, by giving regulatory freedom to form entities. The take-up so far has been steady but unspectacular. Most have been incorporations of self-employed practices of individual barristers, where the barrister is sole owner of the entity or joint owner with their spouse.
The few chambers that have embraced the concept have largely sought to replicate the traditional chambers model, with associated barristers remaining self-employed and central overheads funded by way of fee contributions.
Our belief is that things are about to change radically and quickly. We anticipate the emergence of genuine ‘Bar firms’ that emulate solicitors’ firms. These Bar firms will employ staff and barristers, their stakeholders will share risks and rewards, and, over time, they may attract equity investment and capital value on sale. How then might Bar firms benefit from the experiences of their law firm cousins?
Working with law firms over many years, we have seen the collective power of a group of individuals working together with a view to profit, and how the pooling of resources and intellectual capital can bring out the best in each individual. But sharing risk and reward is likely to be an alien experience for many barristers. Some may be enticed by the prospect but find it hard to take the required entrepreneurial leap, put hard-earned cash on the line and accept the uncertainties of collective decision-making.
Keep the core ownership tight. It is best to have a small number of similar-minded, risk-oriented individuals owning your entity vehicle and find other ways to incentivise and reward others.
It is rare to see a new law firm set up in any other legal form than a limited liability partnership or limited company. It is likely that most Bar firms will adopt the same approach for their trading entities. As law firms introduce non-lawyers (mainly professional managers and equity investors) as owners or managers, there has been a strong growth of SRA Alternative Business Structures. As barristers follow suit, there is likely to be a similar growth in BSB Licensed Bodies.
Take specialist accountancy and legal advice on the best legal structure for your entity.
It is not uncommon to find that the business model initially proposed is not viable. It is usually possible to restructure to bring it clearly within regulation, or to take outside the scope of regulation altogether.
Take specialist legal advice on the regulatory status of your proposed model to avoid wasting time and money.
However exciting a business model may appear, financial forecasts with realistic sensitivity analysis are essential.Get them stress-tested by external accountants experienced in the legal sector to help temper unrealistic optimism.
Know your numbers inside out before taking steps to formally engage with stakeholders, funders and other third parties.
Barristers within chambers are adept at managing conflicts of interest. Once sharing profits as LLP members or co-shareholders, sophisticated conflict management protocols are essential.
Run exhaustive tests to make sure future conflicts can be identified and will not hole your entity below the waterline.
Some external funding will probably be required. This will be debt, equity or a mixture of both. The key to getting the mix right is understanding the drivers of the funders and their impact on structure and operation of the entity.
Be clear on what type of funding is needed and seek to align the interests of owners and funders.
Far-ranging month for the Chair of the Bar
Endometriosis Awareness North, a charity raising awareness of endometriosis and supporting those affected across the North of England, has received a £500 boost from AlphaBiolabs via the company’s Giving Back initiative
Marie Law, Director of Toxicology at AlphaBiolabs, examines the most recent data on alcohol misuse in the UK, and the implications for alcohol testing in family proceedings
Clement Cowley, Partner at The Penny Group, explains how tailored financial planning can help barristers take control of their finances and plan with confidence
Marie Law, Director of Toxicology at AlphaBiolabs
A £500 donation from AlphaBiolabs has been made to the leading UK charity tackling international parental child abduction and the movement of children across international borders
Heritage as an anchor and a compass, finding our common humanity and embracing the power of the outsider – Melina Antoniadis’s lessons learnt
Is the Judicial Conduct Investigations Office process fit for purpose? Women barristers’ experiences of bullying are not being reported or, if they are, they are not making it through the system, says Tana Adkin KC
Review by Daniel Barnett
Chair of the Bar reports back
The client’s best interests could be well-served by sharing the advocacy with junior counsel more often than you might think – Naomi Cunningham and Charlotte Eves explore some less orthodox ways to divide the speaking role
