Our lawyers have the freedom to decide what type of practice they want to design for themselves, which matters they want to work on, what clients they want to work with, how they want to work with those clients, and how to price our services. Those are decisions that lawyers want to be in control of.
UK-based ABS Keystone Law and Australia-based ILP Keypoint Law are “dispersed” full service law firms, with senior solicitors working from satellite offices, supported by a central office. Private equity firm Root Capital holds a 35% share of Keystone; Keypoint Law’s shareholders include Keystone Law.
Keypoint is a law firm for talented senior lawyers who are expert in their respective practice areas and love the practice of law, but they do not want to do it within the constraints of the traditional law firm model. Our lawyers earn 70% of the fees that they bill, in a structure that is very low overhead and allows them the freedom to tailor their pricing in a way that appeals to their clients. Our firm gives lawyers a style of legal practice which combines the best features of sole practice with all the benefits of a firm.
Our lawyers have the freedom to decide what type of practice they want to design for themselves, which matters they want to work on, what clients they want to work with, how they want to work with those clients, and how to price our services. Those are decisions that lawyers want to be in control of. They do not want those decisions to be dictated to them by a management board or a partnership or a bureaucracy. They don’t want the firm dictating to them how many hours to work, who to work for or how to bill. Lawyers want to own and control the business decisions that affect their practice.
At the same time, lawyers want to be able to benefit from the resources of a large firm — IT systems, secretarial assistance, professional indemnity insurance, colleagues in complementary practice areas, legal research tools, access to interns, continuing legal education, collegial events.
We have only senior lawyers (average 20+ years’ experience), and they have all the autonomy they want to make business decisions about their practices and not be answerable to anyone on those decisions.
Keypoint is an incorporated legal practice. We provide a range of services to our lawyers — secretarial support, meetings rooms, teleconferencing facilities, professional indemnity insurance, IT systems, invoicing and accounting, file archiving, collegial activities. This is funded from the 30% of the client fees that we retain (the remaining 70% is paid to the lawyer).
Keypoint was launched in May 2014. Today we have about fifteen senior lawyers.
There are four distinct profiles of lawyers who are attracted to the Keypoint model. One of those profiles is women with children, who are looking to enjoy legal practice, but without the need to bill 60 or 70 hours a week and with complete flexibility with respect to where they work. In this regard, they are free to work from their own satellite office or from the firm’s offices if they prefer.
A second profile is people who have been partners in firms, but are no longer enjoying the experience. They want to have more autonomy, but do not want to go into sole practice because it is isolating and does not offer the infrastructure or support (IT, billing) of a firm.
A third profile is sole practitioners. They can find it difficult to win business as a sole practitioner, notably if they are pitching to large businesses who are seeking a holistic service across disciplines. With us, they can offer a holistic service.
The fourth profile is lawyers who are increasingly concerned with the large overhead of law firms. We had one lawyer come to us and say that all they need is a computer, a cell phone and a subscription for research tools. They no longer wanted to be saddled with things they see as unnecessary and as reducing their earnings. Our model offers them the opportunity to earn more money.
Our lawyers do need to come to us with a strong client following. That being said, someone with the capability to build a client following could do that with us.
One of the ways that we support our lawyers is with marketing. We run marketing events, we produce marketing material, we work on tenders. We recently successfully applied for registration on the Australian government’s list of eligible law firms — with that registration, our lawyers can provide services to Commonwealth government agencies.
Keystone Law (UK) has a major shareholding in Keypoint Law. James Knight, the Managing Partner of Keystone Law, is on the Board of Keypoint Law. Keystone provides us with a lot of support — know-how, guidance, systems, documents, marketing materials. We benefit enormously from their proven success with our model over many years in the UK.
In addition to Keystone Law, Keypoint Law has four additional shareholders. Two of those shareholders are companies which have directors or nominees who provide services to Keypoint, and two are purely financial investors.
We are structured in a manner very similar to Keystone. We have a central office that provides a wide range of services and support to our lawyers. In that central office, we currently have four FTE (full time equivalent) employees: me, another of our directors, a practice manager, a graduate lawyer, and some part-time resources. We also utilize a host of third-party consultants to provide services to the firm where they can be delivered by those parties more cost-effectively (like IT). We expect our Central Office team to grow as Keypoint grows (Keystone has about 25 people in its Central Office now). Like Keystone, our lawyers are self-employed.
I am the Legal Practitioner Director. It is my responsibility to ensure that we have appropriate management systems in place. It is my job to provide supervision and oversight of the practice, to ensure that our Principals are happy and getting the support that they need, and to attract new lawyers to the firm.
We have regular meetings with representatives of our investors to inform them on how the firm is progressing, as you would with any group of shareholders. The people we meet with are successful business people who have experience in a number of different fields; and they are well placed to advise us on how to grow and improve the firm.
For example, it was through discussions with our investors that we decided to change our model to offer office space to lawyers who would like to license it, at cost from the firm. Our investors provided valuable input into that process.
In Australia, if anyone in an incorporated legal practice engages in professional misconduct, the firm’s Legal Practice Director can be considered responsible for that misconduct unless it can be shown that all reasonable steps have been taken to prevent it. That places a significant responsibility on legal practitioner directors. In order to meet the requirements of the legislation, legal practitioner directors need to ensure that the firm has appropriate management systems in place which are operating properly. In Australia, if lawyers do not conform to the legislative requirements and solicitor conduct rules, they could lose their right to practice. There is a very strong regulatory context in which law firms operate. For that reason, the view in Australia is that there should be no obstacle to nonlawyer shareholders because there is a sound regulatory framework in place to ensure the correct behaviors.
At any rate, there are many companies that provide services that have profound implications on our lives — child care services, nursing services — their shareholding is open to people from all walks of life, and no one thinks that the shareholdings of those organizations should be restricted to child care professionals, nurses etc. We have laws that establish duties on Directors of companies, and this provides a good level of protection against undesirable conduct on the part of directors.
If you do not have business people involved in law firms, then this limits how legal services can innovate and evolve. Outside investment and business expertise, together with regulation, is a very good combination. You don’t need to ‘throw the baby out with the bathwater’ by precluding nonlawyer investors from becoming shareholders; you simply structure the regulations so that they set the standards of conduct you wish to achieve.
Like every industry, the legal industry is evolving. It is evolving in two ways — both how clients want to receive legal services, and how lawyers want to provide them. Our regulations in Australia support a diversity of shareholdings and this in turn supports innovation in the way legal services are delivered.
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