Q&A: Spring Law

Formerly a lawyer at both Simmons & Simmons and Denton Wilde Sapte, in 2002 Tim Perry founded Spring Law as an alternative to the traditional law firm partnership structure. Senior level solicitors are able to work from wherever they choose geographically on a consultancy basis, with common access to a central London hub of resources and experienced associates. He tells Richard Brent he now expects to welcome a new wave of disenchanted or displaced talent.

What does your model of delivering legal services have to offer that is different?

The model isn’t unique in other industries, but it is reasonably novel in the law. Our core objective is to correct a general malaise in the legal market in London in terms of the value it delivers to the client. Everyone that has worked in the major City practices knows that the fee structure of those firms is increasingly under strain. One of the reasons that is the case is that you have extremely highly-paid top executives – the partners – who have very high expectations of the amount of money they should be taking out of the firm every year. They set extremely high billing targets for themselves and their associates, and the result is that the lawyers in the firms feel compelled to bill for their own benefit rather than for the benefit of the clients.

At Spring Law we don’t have the resources or inclination to go and spend a lot of money on very expensive lateral hires, who may or may not deliver, but where one thing they will do is bring a very significant cost base. We have a highly lean central group of fully employed lawyers, all from ex-City backgrounds and dominated by three to nine-year post-qualified associates. But the really heavy cost base – the people you need to bring in to help grow sector expertise or plug gaps – is off my balance sheet. It’s sitting in a sequence of space pods if you like, all connected to the mother ship.

How is the business changing?

We’ve now decided to go for a real push with the consultancy model. We already have five consultants, but we’re now saying we have real confidence in this model. We’ve seen enough of it to know it works very well, and also that in this environment it is the law firm fleet-footed enough
to offer alternatives and keep costs low that will win.

A lot of people have been let down by partnerships over the past 18 months. You could be a very capable finance lawyer, but if your practice area has fallen quiet, you are deequitised and thrown out of the business. There’s disillusionment and a lot of talent out and about.

Added to that you have the entire female market, who may struggle to go back to work part time as a partner. The truth is that partnerships don’t like the notion of part time. It doesn’t sit easily with them. That’s another massive market we can offer an alternative engaging route for.

How fast do you now expect to expand?

I think the model can really grow as quickly as we are able to interview. We added two consultants in the last two weeks – and that’s without having to try and do anything.

We currently have a file full of over 150 potentials. One that I had a meeting with is the former head of legal at a major retail bank. Another is an individual who was in line for managing partner at a major City firm, but who was passed over and has now left.

The beauty of this model is if you can get the right individuals with the contacts and client relationships, it almost runs itself. These people are used to running themselves as autonomous partners.

Your website mentions you have no monthly billing targets at all. How do you ensure you manage performance effectively?

It is unusual, but I’ve said it from the word go and I’ve stuck to it. I call it the nose test. To measure someone’s performance purely by the number of hours they bill is an extraordinarily narrow-minded way of managing. There’s more to people than that, and their contribution can be measured more widely than that. I know from my nose if the business is busy. I don’t need billing targets to be exceeded or missed. If you make it clear you are a meritocratic environment and trust to people’s responsibility, I honestly think the results take care of themselves. If everyone is pulling their weight, everyone wins.

As a company we can also reward people more flexibly than a partnership. Lockstep is a hopeless system if you want to encourage youth talent and we don’t have those vested interests of the partners to accommodate.

Have you estimated how much money you save with the model?

Honestly, I would say that on any matter we do our fees are typically a quarter. I worked on a transaction for a major UK plc, which had a City law firm on the other side. It was a matter of public record what their fees were, and they billed £1 million. I billed £150,000. Now, £150,000 is a lot of money. A million was just completely ridiculous.

Do you see a trend for this model, or any another alternative to partnership, becoming more commonplace in future?

No. I think there is an opportunity for one or two businesses, but it won’t appeal to everybody because they’ll believe they are more secure in a law firm setting.

That isn’t the case. What this recession has shown is that you may think you have security as a partner, but all you are doing is renting a desk and sharing in the annual profit or loss. Any one of us who is employed is only really between one and three months away from personal insolvency. It’s a sobering thought. Depending on your asset base you’re only as good as your notice period. I realised that myself when I was slung out on a receivership.

This model is right for entrepreneurial individuals, and it’s also the logical model. You’re not being asked to do everything alone, and otherwise it’s no different but the revenue share is unambiguous. It strips out the worst excesses of a partnership, but enables people to concentrate on building relationships and doing the work.