QualitySolicitors represents a new generation of firms changing the way that law is done on the high street. With the advent of alternative business structures later this year, LB investigates what impact these new players will have on the industry.
It’s just after the May Bank holiday and the co-founder of QualitySolicitors, Saleem Arif, is on his mobile in a windy motorway service station explaining the thinking behind his business. Arif has spent the past two years driving the length and breadth of the country, along with his business partner Craig Holt, recruiting new law firms to QualitySolicitors. He is on his way to Stockport to talk to three small law firms interested in coming under the Quality banner, potentially another outpost for the pink and black brand.
‘I typically work from 8am to 9pm and have a newborn baby, so don’t get much sleep,’ Arif says ruefully. But he says it’s been worth it: in two years the start-up has grown to a turnover of £8m with some 170 branches across the UK. It recently announced it was teaming up with WHSmith to offer legal services in store and claims it spent more on advertising last year than any other law firm in British history, some £6m.
‘At the beginning of 2009, we had no money and no law firms on board, but this idea feels like it’s come along at exactly the right time,’ he says. ‘Law firms are wanting to find a way to tackle Tesco law.’
Indeed the timing is spot-on: the high street is in flux, with small law firms running scared that their market will be gobbled up by big brand new players like The Co-operative and Virgin once alternative business structures come into force later this year.
QualitySolicitors may be a touch downmarket – its one London branch is next to a Poundland in Lewisham shopping centre and was opened by an X Factor runner-up – but it is one of a new generation of businesses that will change the way that law is delivered on the high street in the coming years. Quality and its ilk will also affect the way law firms deal with their customers further up the legal food chain, squeezing mid-market firms and ushering in transparent pricing and the demystification of legal services – no bad thing for the customer, but potentially a real threat to existing firms.
The Quality story
The idea for setting up QualitySolicitors developed when Holt was moving house and couldn’t find a local solicitor. Arif and Holt met through their ex-girlfriends many years ago and have been friends ever since, so much so that Arif was Holt’s best man at his wedding. ‘I got a phone call from Craig in 2008,’ Arif recalls. ‘He was moving house and complaining that there were no significant national brands and no obvious place you could go to as a consumer. We asked “why not?”’ The solution seemed obvious: find a way to weave together disparate, independent high-street law firms and make their own national brand.
Holt and Arif don’t have typical legal business backgrounds, for starters neither is a solicitor. Craig Holt is a family law barrister by trade and Saleem Arif was a marketing consultant at McKinsey & Company and had a stint at Merrill Lynch. Throughout the interview with LB Arif peppers his speech with business jargon and stats that he likes to rattle off (‘73% of the population visit WHSmith every year’, ‘it’s got a 91% footfall’). The pair’s non-traditional credentials perhaps go some way to explaining the central ethos of QualitySolicitors: it’s all about the brand.
As branding consultant Ian Stephens at Saffron Consultants points out, law has never really had a credible national consumer brand. ‘Law is an unusual market, historically lawyers haven’t had very differentiated offerings,’ says Stephens, who recently advised Baker & McKenzie and Taylor Wessing on their rebrandings. ‘Law firms are behind the curve with branding compared to the rest of the economy,’ he adds.
In late 2008, Holt and Arif wrote a business plan for a glorified ‘find a solicitor’ service with a hefty marketing budget and aggressive advertising to boot. They pitched the idea, Dragons’ Den style, to potential investors and eventually ended up with four angel investors, one of which was ex-Slaughter and May lawyer and former legal and commercial affairs director at P&O Michael Gradon.
‘We don’t want to be a ragtag bunch of firms. If we start getting complaints about a firm we can tackle it early.’
Saleem Arif, QualitySolicitors
Holt became chief executive of the new company and Arif his chief operating officer (although both now have a 50/50 ownership of the company after buying out the early investors last year). Arif then quit his job at McKinsey and moved lock, stock and barrel from his home in central London to Leicester to be closer to Holt’s home and develop the new brand.
The lead referral model worked well enough for a time as the pair developed the QualitySolicitors identity. Member firms paid a fee for a pooled marketing budget. Enquiries were channelled through the QualitySolicitors website and then divided up among member firms. On the high street nothing much had changed. The firms were not Quality branded, it was just their online presence that received the ‘Quality’ treatment. They managed to sign up 150 law firms but the duo felt the model was not sustainable in the long term and decided to change tack. Inspiration came from an unusual source: the opticians market of the 1980s, in particular Specsavers. Arif first heard about the Specsavers franchise model while studying for his MBA at London Business School and the pair thought it was one that would work well for a law firm.
Much like the current legal market, in the early 1980s opticians were heavily regulated and the market was made up of thousands of independent high street practices with no national brands. When Margaret Thatcher’s government deregulated the industry, allowing opticians to advertise, Specsavers stepped into the breach, signing up hundreds of independent opticians and creating the first national optician franchise and brand.
‘I always thought Specsavers was a clever model,’ Arif explains. ‘They brought together thousands of independent opticians, standardised the service and now control about 40% of the market.’ Twenty-five years on from deregulation and Specsavers now has over 1,300 stores worldwide and an annual turnover of over £1bn pounds. The key to Specsavers’ success was developing a credible brand under a franchise umbrella.
QualitySolicitors opted for a similar model, with member firms paying an annual membership fee, a large chunk of which goes towards a pooled marketing and advertising budget. Firms do not profit share and the annual fee varies depending on the size of the firm and affluence of the exclusive area that it covers.
With its pink and black logo, 3D animated adverts voiced by Amanda Holden and shops opened by other ‘celebrities’ like Stacey Solomon of X Factor fame, Quality has pitched itself firmly in the lower reaches of the market. But Ian Stephens believes it’s been relatively successful at simplifying a legal services brand. ‘Quality has created a good retail proposition,’ he says. ‘It is making the law firm look more accessible. It has made a retail product out of a complex market,’ he adds.
To entice new firms into the network, QualitySolicitors has embarked on an aggressive marketing campaign, essentially telling high-street solicitors to adapt or die. Last month it took a front page wrap-around advert in the Law Society Gazette to drum up interest from potential firms. The advert bluntly told high-street solicitors: ‘You are vulnerable, your good local reputation will not be enough. Your firm is not well-known locally, whatever you may think.’ The bald message is join us or go under.
So far 170 firms have already undergone the six-week rebranding process. The firms are a mixed bag: ranging from two-partner practices all the way up to 29-partner firms; a few have a good reputation, such as Jackson & Canter which is headed by the former president of the Law Society of England and Wales, Andrew Holroyd. Burroughs Day, a well-respected local outfit in Bristol that ranks in the top tier locally for personal injury claimant work in The Legal 500, has also signed up. But the majority of QualitySolicitors firms don’t have such solid reputations or are simply not known outside of their very small catchment area.
Putting the ‘quality’ in QualitySolicitors
The sheer diversity of firms within the network is something that commentators pick up on. ‘A common logo doesn’t mean providing a consistent service,’ says Jonathan Denny, managing partner of Cripps Harries Hall. ‘How can 100 different law firms be consistent over a huge range of issues?’
Arif concedes that entry criteria ‘weren’t quite so tough in the early days’, but believes that the company has upped its game, introducing some basic minimum standards. But these entry standards remain pretty minimal. To become Quality branded, a firm must have Lexcel training, have a clean Solicitors Regulation Authority record and provide a few client testimonials to QualitySolicitors’ management. In addition, Holt and Arif visit the firm to see if the partners fit the ‘QualitySolicitors culture’. Not the most rigorous due diligence, but hopefully enough to weed out the very worst.
As Richard Moorhead of Cardiff University points out, the quality of the rebranded firms will be increasingly important as the company gets better known. ‘They are the quickest and slickest out of the block. But they will come under attention from consumer groups. It will be about getting a critical mass and not picking any duds,’ he says.
Also, the company does not monitor the quality of legal advice offered, instead it monitors service levels, with an assessor visiting firms and completing a checklist asking questions like: how quickly are e-mails or phone calls responded to? Are fees clearly explained to customers?
Holt and Arif are also steering well clear of day-to-day management of the firms. Although QualitySolicitors insists that member firms have fixed fees for popular services, such as wills and conveyancing, it allows the fees to be decided by each individual firm.
Ultimately a brand is a promise of consistency of quality, if you can’t deliver on that promise then a brand becomes worthless. Getting that consistency right and delivering the quality in QualitySolicitors will be a major headache for the company and the rush to sign up firms raises serious questions about the quality of the practices on its books.
‘A number of these new entrants to the marketplace know how to provide excellent service to their customers while arguably many in the legal sector do not.’
Andrew Morton, Pannone
It’s a point that Judith Dorkins, head of consumer legal at Shoosmiths, highlights: ‘The issue is that there is no governance under the brand to control the delivery. If you have a franchise, like McDonalds, you know wherever you go the service will be the same – but with Quality the practices are the same as before they joined the brand.’
The model is reminiscent of Eversheds in the 1990s. In its early days, Eversheds was formed from a collection of big-name regional practices that did not share profits or have a single remuneration system. Despite only being made up of a half dozen or so well-known regional firms, it still took Eversheds the best part of a decade to shake off its franchise tag and to forge a national identity and service level that was seen as consistent.
But there are signs that QualitySolicitors is looking to increase integration between the member firms. This year the company claims it negotiated a 15 to 20% discount on PI insurance for member firms and next year is looking at introducing centralised cashier and accounting systems. Plans are also afoot to bring in cross-referral fees throughout the network, bringing network firms closer together financially.
Arif is quick to defend the lack of oversight and the quality of member firms: ‘We want to keep the heritage of the firms and their independence. We don’t want to be a ragtag bunch of firms. At the end of every case we collect feedback on the firm, so it’s an early warning system and if we start getting complaints about a firm we can tackle it early.’
In April, QualitySolicitors announced a tie-up with WHSmith that could see the company set up in 500 high-street stores. The company was contacted by WHSmith after a member of its management saw the QualitySolicitors commercial in an ad break during Coronation Street. ‘He dropped me an e-mail on Monday morning and we took it from there,’ says Arif. ‘We did a two-week trial in Bristol and found it was a very cheap way of generating leads. We think Smiths will really raise our visibility.’
The company plans to have stands in 500 WHSmith shops, some manned by QualitySolicitors representatives, helping to advertise the merits of the member firms. If the plans go ahead, it could be instrumental in making QualitySolicitors a viable competitor to other newcomers to the legal landscape, like Co-op, Virgin, Saga and RAC. Co-op in particular is already a major player in the retail market. Since it set up its legal services division back in 2007, the company has managed to grow to a turnover of £24.4m and is seen as a formidable high-street force.
Lessons for the City
High-street law may seem remote from big City practices, but changes to the way law is delivered at the retail level will doubtless have a knock-on effect further up the food chain.
For a start, new players like QualitySolicitors and Co-op will gobble up private client work from small and medium players argues George Bull, head of professional practices at Baker Tilly. That means smaller players shutting up shop and a squeeze on mid-sized firms. ‘Even if the impact of alternative business structures is only to the high street there will be consequences for bigger firms,’ says Bull. ‘Say you are a mid-sized regional firm, if a chunk of your private client work goes to a high street firm, that will have an impact on your firm and may be a critical loss that means your business is no longer viable,’ he says.
‘Co-op can already demonstrate it can build a routine legal services business,’ Stephen Mayson of the College of Law, points out. ‘They’ve done that when a lot of firms have been saying it’s a stagnant market and I don’t get the sense they will stop growing or restrict themselves to volume business over the next few years.’
Another logical next step will be for these firms to take on volume work for small and medium-sized enterprises (SMEs), which potentially poses a challenge for most firms in the lower echelons of the top 100. Indeed QualitySolicitors has said that offering services to smaller business is a ‘major priority’ for the firm. Much like the average high street consumer, most SMEs use lawyers infrequently and are highly cost conscious, so there seems no reason why new players could not make significant inroads into business law.
Aside from potentially taking business from existing law firms, the new players will have a profound effect on what consumers at all levels expect from lawyers. For most people, visiting a lawyer is to be avoided. It’s often a time-consuming and usually expensive experience. It is also an intimidatingly mysterious process, with confusing jargon and unfamiliar ways of doing business. But with new players offering transparent menu pricing and higher levels of customer service, lawyers won’t be able to get away with their old habits. There seems no reason why more discerning customers, say a general counsel of a major corporate, would not expect this as standard in the future. In fact, more and more are.
‘The legal profession is still struggling to come to terms with the consumer,’ says Andrew Morton, head of Pannone’s new consumer division. ‘A number of these new entrants to the marketplace know how to provide excellent service to their existing customers while arguably many in the legal sector do not. Lawyers think a client will be unhappy if they misinterpret section 3 of whatever Act, but clients are usually more unhappy if no one answers the phone.’
Tony Williams, former managing partner of Clifford Chance, now a consultant at Jomati Consultants agrees: ‘At the retail level it’s encouraging people to have proper shop fronts, longer opening hours, more approachable staff and that can only be a good thing,’ he says. ‘We are fundamentally a service business. Look at the opticians model – they were all one-man bands ten years ago and you had to wait weeks to get your glasses, as a punter I just want to be looked after. You’ve got to listen to the people that are paying you, it’s part of the arrogance of the legal sector that we don’t.’
Back at the services and Saleem Arif is ready to get on the road again. ‘It’s a much more entrepreneurial job than I used to do, I’ve got a lot more freedom and opportunity now,’ he says. Schlepping up and down the country talking to solicitors may not be a glamorous job and frankly, most City lawyers would turn their noses up at dealing with the likes of QualitySolicitors. But lawyers should take note. Whether QualitySolicitors succeeds or fails, it will be the entrepreneurial newcomers like them that will change the way that legal business is done over the next few years. LB