International law firm Withers LLP has set up a non-legal consulting practice, the Withers Consulting Group (WCG), which the International Advisor reported launched this month. Diversification of services into non-legal or quasi-legal consulting is already a tried and tested method for law firms to generate new revenue.
The District of Columbia Bar permits Washington, DC-based law firms to maintain hybrid law and lobbying practices together with non-lawyer professionals, for example. And these arrangements have proven to be extremely lucrative. And the trail has been blazed previously by accounting firms as well. The Withers practice is focused on strategic planning outside the realm of the strictly legal for families, business owners and entrepreneurs, and builds upon the firms already existing practice of legal services to that client base.
Follow the accounting professions diversification success
George Beaton, Head of Australia’s Beaton Global, provides a superb outline of why law firms should diversify in an article published late last year in the Financial Review. In that article he outlined:
- “Growth of the Big 4 accounting firms is outstripping that of their legal counterparts, the Big 6 in Australia.
- Accountants are benefiting from diversifying their range of services, sectoral focus and geographic reach in a way that delivers them good upside and largely shields them from the vicissitudes of the economic cycle.
- This divergence in business strategy between accountants and lawyers is surprising, more especially as the needs of clients are multi-faceted, often complex and extend well beyond law firms’ traditional services.
- Lawyers and accountants serve the same corporate and government clients and have just as much access to C-suites and boards, yet lawyers are allowing others to be much more competitive for new business by not diversifying their services offer.
- Examples of successful law firm diversification (judged in terms of growth, profitability and how complementary the services are) – have existed for a decade or more, albeit in relatively small numbers and scale.
- Non-legal practice offers in those law firms that have diversified include specialities in governance, risk, compliance, policy, regulatory affairs, procurement and commercialisation.”
New law firm revenue generation easier via services diversification
I know from first-hand experience of working with non-legal or hybrid consulting/legal service providers that those diversified services offers are a superb tool for use in generating revenue in both domestic and international markets. Those alternative services offers often permit a law firm to very closely align a non-legal service offer with the commercial interest of a client.
Once the client is engaged on these non-legal matters – they often naturally turn to the law firm for more traditional legal services as well. In the United States, it may require the establishment of an independent entity in order to satisfy bar regulations, as law firm management consulting firm Altman Weil points out – but it’s well worth the effort.