Alternative law firms growing faster than traditional firms, report shows

New research has revealed that alternative law firms (ALF) are growing at a faster pace than their traditional counterparts – and there are even suggestions that up to a quarter of lawyers could work at ALFs in the next three years.

The data, supplied by Codex Edge and their software platform ATLAS, marks all lawyers as “consultants” due to some firms recording their lawyers as partners. ALFs work on a split-fee basis, meaning fees paid by the client are split between the regulated firm, the lawyers that act for the client, and the lawyer who introduced the client. Around 70-80% of the fees go to the lawyers and the rest to the firm.

For gender, the report shows that females make up 52.08% of the ALF sector. This shows the growing number of women in this marketplace as in 2020 there were more males in the ALF market. However, the number of women in ALFs are lower than solicitors across the whole legal spectrum with SRA figures showing women make up 61% of all solicitors.

London has by far the largest number of consultants of any city at with 1281, with the next closest being Manchester’s 121. 

Figures show that there are 162 consultants in the family law sector. In terms of the largest numbers by firms, Setfords lead the way with 51 consultants, followed by Taylor Rose MW on 30.

The gender balance shows a major gender imbalance in favour of women with 125 female consultants, compared to just 37 males. This shows that over 77% of lawyers in this sector are female.

The number of new consultants for all of the major ALFs is higher than the number of leavers, outlining the growth in ALFs. Whereas, in firms such as DWF, Eversheds and CMS, three of the most active traditional firms the number of leavers is higher than joiners.

Paul Bennett, Partner at Bennett Briegal LLP, provided exclusive commentary to Today’s Family Lawyer on the ALF report. He stated:

“My general observation is the freedom for solicitors to do their own work and be self-contained businesses within a platform structure is proving to be a very attractive experienced lawyers in particular.

What the report does is identifies, not just that known group of people are using this model, but also those who are 4-6 years PQE are also. They are a genuine alternative to high street firms, mid-size commercial firms and also to starting your own law firm.

It is interesting the dominant areas are residential property, commercial property and commercial litigation. These are all very ‘vanilla’ areas of practice and are done in almost every law firm in the country, which tells you the ALF model is actually proving a wide-ranging model.”

However, Bennett also warned the model is not suitable for all firms. He added:

“It is only the right model for those who aren’t interested in management and for those who aren’t interested in running their own business. It’s not the right model for those who want to succeed or fail purely upon on their own resourcing skills and contacts, but absolutely the right model for those who want an infrastructure and to then to be given a high degree of autonomy within that infrastructure.

The lack of ownership for very senior lawyers makes it unattractive for those who have a huge following and are looking to reduce their own workload. In that scenario, the lack of centralised quality control across the disciplines because lots of these platforms require people to work from home or rent a small office.”

On the predictions in the ALF report that the ALF model would supersede the traditional model in the next three years, Bennett stated:

“I don’t think it will happen in the next three years, but I do think it will happen. I think it will take slightly longer than that. The instability in the economy and the rate of inflation and cost of living  crisis. All of that will, potentially, slow down the appetite for those who are looking at this already. I think more likely this will happen in the next 5-7 years.

I think we will also see a shift to niche firms as after the pandemic people have seen the benefits to working from home which will lead to more specialist firms.”

Join nearly 1,000 other family lawyers – sign up to our newsletter