NorthEdge's investment, expertise and contacts have proved absolutely vital...It's not just physical growth but also developing our operating efficiencies, IT systems, employees and the management team.
Roberts Jackson is an ABS that specializes in industrial disease and other work-related claims litigation.
Karen Jackson (my wife) and I created Roberts Jackson in 2009. At that time, Karen had been working as a partner in a large firm in the area of defendant industrial disease litigation and I had been working in corporate law.
We started out from scratch, just the two of us — in two years we grew to 50 people and today we have circa 250 people.
Karen was the expert in the subject area of industrial disease litigation — it was not an area that I understood. That freed me to focus on strategy and how to grow the business and take it forward.
What I did was work on our structure, recruitment, what types of people we needed to bring in, and what types of cases we needed to bring in.
We set up our own marketing department, which generates most of our work, and we also set up additional support structures, such as a graduate training academy, and compliance, finance and IT departments.
We were fortunate in having a good relationship with our bank and other financiers, which helped us with funding. Now that we have private equity financing, we are looking to further develop our IT and our case management systems, as well as our people, and we are also looking at the possibility of acquiring other firms.
I myself focus on strategy — I look for opportunities to improve, develop and grow the firm further.
External funding may not be right for all firms, but for our area we felt it was the right thing to do. It permits us to benefit from economies of scale — we see that there is a lot of work out there, but that we need to be at a certain scale in order to take full advantage of it.
We have circa 14,000 cases outstanding at the moment and that number is growing day by day. This makes our IT processes and our case management system very important in making sure we can handle cases as expertly and efficiently as possible.
We have consciously avoided the traditional partnership structure in favor of a corporate model. We have a COO, a CTO, an FD and a Chairman and they have all worked for major corporate multinationals; through the partnership with our private equity partner, we have been able to take advantage of the expertise of people who have been in other businesses outside of the law.
Our application process to become an ABS was very involved — there were a lot of forms, and it took a lot of work over about six months. But ultimately the SRA was collaborative and helpful every step of the way. The questioning was personal as well as professional as the SRA needed to know all about our management team in order to be sure each person was fit and proper to run a law firm. I think the SRA now has their application process in a much better place.
While we had contemplated potential exit strategies from the inception of Roberts Jackson, it was an approach from another much larger law firm that led us to get in touch with a corporate finance specialist at Deloitte. A partner there who dealt with private equity investment spent nine months going through our model himself. We then met with a number of private equity companies and a potential trade buyer before finally deciding that NorthEdge Capital was the most appropriate partner for us. Their investment in Roberts Jackson was finalized in August 2014.
NorthEdge’s investment, expertise and contacts have proved absolutely vital in helping us to continue to grow and develop from a small company towards a mid-sized company. It’s not just physical growth but also developing our operating efficiencies, IT systems, employees and the management team. NorthEdge are advising us on this process and helping us identify the right people to bring in.
The external funding has also allowed Karen and me to de-risk our personal investment and has assisted with the development of a robust succession program — it’s a way for us to extract some of the capital we had invested in the business while enabling us to stay at the forefront of its development. We had invested a lot of time and money into the business, and this new investment has allowed us take some of that capital back. At the same time, we wanted to remain fully involved in the company’s growth as we think with NorthEdge’s support, we can develop the company even further and then we, NorthEdge, and our other new shareholders will benefit from a second exit, whenever that occurs.
Our Directors and senior management now have a wide variety of skills outside of the law: we have a marketing specialist, a finance specialist, an operational specialist, a technology specialist, and a compliance specialist. At least two representatives of the private equity investor attend our Board meetings and provide invaluable reference points from their experiences with other businesses within their portfolio of companies — none of these specialists are lawyers and so they bring with them a wealth of knowledge that would not previously have typically been part of a law firm’s structure. We’ve always wanted to bring in ideas from outside the law to enable us to further innovate and think beyond traditional legal services — for Karen and me this was very important because we are both lawyers and so we wanted to discuss our business with those with completely different perspectives.
For example, our finance director has worked in a law firm, but also in other commercial arenas and so he comes with a very fresh approach and a new set of ideas. He is able to analyze the company from the ground up from a more commercial stance to really see what is going on, and compare that to his previous experiences. On that basis, we will be looking to adopt many of his suggested changes for improvements to our financing and our processes, notably as regards cash flow and cash collection — two things that law firms are notoriously bad at. Thanks to him, everything we do now with respect to our accounts is more analytical and rigorous.
Our COO is going to assist us to improve our case management — to automate certain parts of the processes, to quantify the time required to complete different steps, and to raise flags if problems arise. With her help we will make our service cutting edge — more slick, efficient and transparent for the client. Finally, with her considerable experience in other businesses, our COO will assist with our most important asset, our people: on training and individual career objectives, and making sure that are new systems and processes assist in our staff’s professional development and advancement.
In such a fiercely competitive market where efficiency and technology, as well as legal service and expertise are now so paramount, it is not possible for lawyers to try to do everything themselves. They need to bring in experts and leaders from other commercial environments that have ideas on how to make processes more efficient.
Having a lawyer do everything is not the way we want to work. It’s too expensive, it takes too long and the clients don’t like it. The law is way behind many other commercial businesses in terms of providing a great service at an affordable and accessible level.
A lot of lawyers live in a bubble — they expect to get paid an hourly rate for a job that might take six months, two years or even ten years and where clients don’t have any control or understanding of the process. We want to open up that process. We want to invest in systems and processes that make the client’s journey quicker, more efficient, cheaper and more informative, and we want clients to play active roles in it so they can contribute to the decision making process.
What we are doing is finding truly talented, committed and intelligent people with a variety of experiences that can come together and find better ways to serve more people that have been victims of negligence but whom otherwise may have been ignored. It is in this way that we can provide access to justice to a greater number of persons.
Each of our Board members owns shares in the business — they are not just employees. It is important for us that they have a stake in the business and that they put their heart and souls into it. We are not asking them to do a standard 9 to 5 job, we are asking them to bring about change and bring about a new and better way of doing what we do. We need them to be fully committed and they deserve to share in the success they help to bring. We are all aligned in our values, philosophy and ultimate goal.
I have heard the arguments that nonlawyer ownership of law firms will lead to unethical behavior, or to the firm taking actions that are in the shareholders’ interests rather than in the clients’ interests. That has not been my experience. My experience is that the shareholders want to create value, and the way for a firm to create value is align itself with the clients’ interests. Reputation and client service are key to the value of an investment.
I see our investors as being in it over time — they are not looking for a quick win. They are looking to improve and enhance the company’s service levels and reputation, not to cash in on it.
The changes to the regulations in the UK was for some a painful and scary process. This was because in many ways we were venturing into the unknown, and notably as regard to ethical issues which lawyers are always most concerned about. Now that we’ve gone through the process in the UK, I feel that the positives outweigh the negatives. The opportunities — allowing external capital and expertise to come in — are a great advantage if managed correctly. There is nothing per se dangerous about an ABS structure. The danger has always been the few unscrupulous individuals that create headlines, and they can be lawyers or nonlawyers alike.
The jurisdictions that do not adopt ABSs may fall behind with respect to systems, processes and IT. That will make a big difference because IT is now going to be very important for building models that save clients time and money. IT also allows scalability, enabling firms to handle high volumes of cases, at the same time that they must be taking even greater care and control over the clients’ journeys. There will be even greater pressures on cost going forward, and firms in jurisdictions that do not adopt ABS may not be able to compete against firms coming from jurisdictions that have. This is something that people in those jurisdictions should be concerned about — the ethical issues are as genuine and real as they are for any lawyers or other professionals in a position of trust. But the answer is not to prevent ABSs — it is to introduce appropriate regulation and monitoring.
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