In this week’s newsletter, we brought you coverage of an article in The Lawyer by recruiter Alexander Dick on this year’s biggest trend in the legal world – lawyers leaving traditional law firms in their droves to become consultants. Though persuasive in his explanation of this phenomenon, Dick didn’t cover several of the most salient points pertaining to more senior lawyers. This is something we now want to remedy.
So, why should senior lawyers choose to work in a consultancy model? Here are four compelling reasons:
1) Some lawyers don’t ever want to make partner or go in-house – they want a valid employment model that rewards them but which doesn’t saddle them with the additional burdens that come with either of those two routes. As Michael Burne, co-founder and CEO of bamboo, puts it, it’s about “freedom and control”. He believes that “for too long, great lawyers have been constrained by the law firm model as to place of work, amount of work, type of client and so on.” They want to be practising lawyers, doing good work and getting paid well for doing so. This is why most of them are PQE>5. And consultancy can offer them the right opportunity for this, as Michael outlines: “Law has always been a people business and personal brands are the driver for winning and retaining clients. Consultancy shines a light on this. You may even find a real equity share, a retirement value in your practice and little risk when compared to a partnership or the larger consultancies.”
2) Some of those lawyers wanting to just get on with doing a good job want to be financially rewarded for their work but without having to attend countless (and often seemingly pointless) meetings that prevent them from hitting their weekly billable hours target. In fact, they don’t really want an hours target in the first place – what they really desire is an ability to earn as they work and the freedom to manage their own time.
3) People often have many caring responsibilities that were previously ignored by the firm – the pandemic showed these people that there didn’t have to be a trade-off between looking after their relatives, working and paying their bills. As one of our clients pointed out to me this week, “a huge amount of female talent has departed from senior private practice roles for this reason – the time it takes to become a partner cuts across childbearing years, and taking time out – even in some cases quite short periods of maternity leave – can be hugely detrimental to the careers of female lawyers.”
4) The fourth and final reason is that consultancy work simply makes more financial sense for a lot of lawyers. The consultancy model has settled somewhere around the 65:35 split. If the business wins the work, then lawyers get 60% of what they bill and the business gets 40%. If lawyers win the work themselves, they can expect 70:30. Do the maths on that model (as we have done below) and you get the real answer as to why senior lawyers are moving to consultancy roles en masse. The economic model on which regional and smaller City law firms are built is at risk – the reward for contribution is out of kilter. And those with over five years’ PQE know it.
The consultancy model – let’s crunch the numbers
Let’s assume you’re a senior lawyer in the City and are mulling over the financial implications of a move into consultancy work:
- If you move out of the City, you can drop your hourly rate by 30% immediately – this means you won’t lose out on as many new instructions. It also means that you compete with regional associates rather than City associates;
- When you are based in the City, in order to earn £100k, you need to bill £300k. In the consultancy model, to earn £100k, you may need to bill as little as £142k;
- If you don’t want to do any more business development (BD) *EVER*, then to earn £100k, you need to bill £166k – just 55.5% of what you did when you worked in the City;
- Let’s say your new hourly rate is £300 an hour. That means that to earn £166k per year, you need to bill (and recover) 533.33 hours per year;
- In a year comprising 47 working weeks, that’s 11.34 billable hours PER WEEK if you don’t do *ANY* of the BD. Alternatively, if you bring in the work yourself, it’s just 473.33 billable hours per year – or 10.07 hours per working week – to earn £100k per year;
- A final thought: if you work in the City, the average London commute is 74 minutes. So if you can convert 6h10 minutes per week into billable time, you’ve done more than half of the hours you need to bill in order to earn £100k without getting on a train or tube.
Try it yourself
Consultancy isn’t right for everyone, but it’s important to weigh up your options and arm yourself with the right knowledge. That’s why we’ve invented the consultancy calculator so you can find out how much you would earn as a consultant solicitor compared with what you earn today.
– earning the same for fewer hours
– charging clients less by the hour
– winning more or less of your own business
– taking more holidays
– working fewer days each week
Go ahead, be curious and try it for yourself below.