Transcript:
Dom Burch 0:15
Welcome to the first episode of Arch Law’s podcast. I’m delighted this week to be joined by Arch Law CEO and founder Andrew Leaitherland. So why don’t you just start off by telling us a little bit about yourself.
Andrew Leaitherland 0:29
My name is Andrew Leaitherland, I am a solicitor have been for well over 25 years, which means that I’ve got a lot of knowledge and experience, which allows me to provide leadership and insight in terms of what the next generation of law firm should look like. I was originally an employment lawyer, then I moved into a management role at a relatively early age, was the first managing partner of DWF at 35. Over the next 15 years, I grew the firm from two locations in the northwest of England with 450 people to a global legal business across 33 locations employing 4300 people. And I also lead the firm to become the first law firm listed on the main market, London Stock Exchange. So yeah, I’ve got quite a bit of experience there really. During my time at DWF, I also had a passion for alternative legal service delivery, which is delivering legal solutions in a different way. And that’s very much the focus for me moving forward.
Dom Burch 1:20
So tell us a little bit about why you set up arch law.
Andrew Leaitherland 1:22
I guess, the benefit of seeing larger law firms from the inside is that you know, what works and what doesn’t work. Quite often larger law firms can be a little bit slow and cumbersome in providing clients with the service that they need and deserve, particularly when it comes to the use of technology. And that’s not because the technology isn’t available, it’s because lawyers quite often struggle to adopt the technology in the right way. The lawyers also struggle sometimes in terms of getting the right recognition and reward for the contribution they make within the law firm. And that includes rewarding their team members, which can be a real battle, sometimes to avoid the usual RPI increase and make sure that people are paid fairly. And that quite often comes from a large central overhead, which has been built up over time. I looked at Arch.Law, and I thought, you know, there’s got to be a way of addressing these issues and create an opportunity for real business builders to come on board benefit from a lower cost base, but also a higher allocation of revenue to them and greater freedom in terms of what they pay people that work with them, within their clusters. I also recognise though, that the solutions had to be different, which is why there’s such a heavy technology focus in terms of what we do. But also, I had created a network of preferred collaborators to compliment our lawyers and to give them confidence in terms of their ability to win work moving forward as well.
Dom Burch 2:34
If I was a lawyer sat listening to this, I’d be like, how do I get involved? So why would a lawyer want to work with you, you know, how would they approach becoming a lawyer with with Arch.Law?
Andrew Leaitherland 2:44
You know, your starting points got to be if you ask yourself, pre COVID, would you thought that you were able to work as autonomously with the freedom that you’ve got now, you probably wouldn’t have thought. So times have changed massively, the change has been rapid. And we’ve all adapted and we continue to do so that isn’t just in the last 12 months. That’s, that’s it on the go forward as well, the way that people work has changed. their priorities have also significantly adjusted in terms of getting that balance between their personal life and their professional life. And, frankly, a fair bit of work life integration has happened over the last 12 months. I think the law firm model is still very traditional and will take time to adjust to this many law firms talk about career and pay progression based upon meritocracy. But inevitably, there will always be a time served element and have you got the relevant experience. That means there’s a huge focus on billings, rather than the overall contribution to the business within a traditional law firm set up. People want freedom to work when they want where they want and how they want, but also want to be rewarded fairly for it. And that’s what we built at Arch.Law. We want to make sure that it’s a law firm for the future, not one that’s rooted in the past.
Dom Burch 3:43
Timing wise, it’s a perfect time, isn’t it, you know, huge changes in how people are working, you know, we’ve been forced haven’t we, through constraints to actually realise that we can work remotely. Just talk to us a little bit then about how the platform itself works, you know, because there’s three elements to it, arch portfolio, arch resource and arch direct, maybe let’s just take each one in turn and, and bring them to life for people.
Andrew Leaitherland 4:05
I deliberately went down the route of creating three different ways of working because not not everybody has got the same personal circumstances, not everybody has got the same desire to achieve certain things. So you’ve got to provide that flexibility of approach. The mainstream approach within Arch.Law is the use of arch.portfolio. And this allows senior lawyers who are confident in their ability to win work and generate work moving forward. And they’ve got a proven track record of doing this and they’ve got supportive clients, it enables them to form their own business within a business they form a personal service company, which effectively is a subcontractor of arch.law, the regulated law firm. The lawyer through their service company can receive up to 85% of the fees that are billed and paid to that service company together with up to 15% of fees referred elsewhere. So it can be hugely beneficial financially, but I think one of the big differentiators is the ability of lawyers to work together within these portfolio companies. So arch.portfolio encourages the creation of clusters, where three or four lawyers, however many you want really can work together, create a larger business, which enables more generous revenue sharing opportunity for for the lead lawyer within that within that portfolio business. Arch.resource, at the other end of the spectrum, very much focused on lawyers who want full flexibility, full freedom to work when they want, usually on an hourly or a day rate basis. And then arch.directors for those people who want a more traditional career route directly employed with a regular paycheck, but see this very much as a stepping stone into an arch.portfolio way of working moving forward.
Dom Burch 5:31
How do you bring that to life? How do you make that real for people?
Andrew Leaitherland 5:34
I think it has to be frictionless. You know, lawyers are naturally very conservative individuals. And you’ve got to take away any reason for them not to do this. So from our perspective, we looked at every step of the journey in terms of joining to make it that frictionless experience. We’ve partnered with Brookson. Brookson One who are an accounting and company secretarial provider, and they will provide the limited company and all the support and the tax return support for the individual on the portfolio way of working, and they will help their portfolio member set up the company in a way that suits them from a shareholding perspective, particularly if there’s a cluster involved and shares are going to be more broadly owned, or if there are other people involved in the business moving forward as well. But it also enables tax efficient distribution through salary and dividends, which is an attraction for people. And it provides regular payment runs every two weeks, rather than once a month, which provides cash flow advantages. When the client pays arch.law pays the company and the individual can then draw upon those funds.
Dom Burch 6:26
And what does the portfolio member receive them because I guess so important, isn’t it to help somebody get on and do the work that they want to do.
Andrew Leaitherland 6:32
This has been built in increments, it is a share of the revenue which is billed and paid by the client, but deliberately incentivizes people to build these big clusters with an arch portfolio. So when the revenue exceeds 250,000, to start off with the individual receives 70% of any revenue billed and paid through their company, when that revenue exceeds 250,000, that that percentage increases to 75%. If the revenue exceeds 750,000, then the percentage increases to 80%. So there’s a real incentive for individuals to build a cluster within their own limited company. This way the portfolio members got the ability to employ associates directly was giving them full control of what the associates are paid, but also ensuring that they can access the higher levels of revenue share, which benefits them in their pocket as well. And if they don’t want to build their own cluster with their own associates, then they’ve got access to those lawyers who were interested arch.resource on a flexible basis. And also those lawyers that we employ directly through arch.direct.
Dom Burch 7:26
And you’re saying not everyone necessarily is ready to go out on their own just yet and build a business. So some people will want to take advantage of this arch.direct membership. And do you see that though, as a stepping stone towards then building your own portfolio?
Andrew Leaitherland 7:40
Yeah, very much so. We don’t see ourselves as traditional law firm in any way, shape, or form. So we don’t want to build a very large group of directly employed individuals. We do recognise people need support in their transition to arch.portfolios, sometimes and arch.direct enables us to provide that support. So yes, very much a stepping stone rather than a long term play.
Dom Burch 8:00
What’s the reaction been like? Uh, you know, are you getting a good response from people particularly, I guess around things like arch.resource?
Andrew Leaitherland 8:05
I’ve been really surprised with arch.resource actually, I thought that it would be very paralegal orientated but but it’s been people at the senior end of their careers, who given up the law for a period of time I want to come in but not on a full time basis, one to provide support on an hourly or a day rate basis. And I’ve been really surprised by the seniority of the people who have been registering for arch.resource. I think the market is very much ready for this way of working. Arch.portfolio, really benefits from those individuals who have seen the freedom that they can have, and the loyalty of their client relationships through lockdown. And that that means that they’re looking for an appropriate revenue share and an appropriate remuneration compared to where they’ve been.
Dom Burch 8:45
Now, obviously, there is no there’s there’s some risk isn’t that people are going to move away from having that confidence of the monthly paycheck coming in as a as a guarantee. But I guess the other thing that you’ve built in, unlike a traditional firm is that arch.law doesn’t require its lawyers to contribute any fixed capital. I mean, that’s a big difference, isn’t it?
Andrew Leaitherland 9:04
I always find it quite entertaining when I have a conversation with someone about arch.portfolio and you know, isn’t it a more risky way of working? And you ask them the question of how much fixed capital have you paid into your law firm, and inevitably, it’s a couple of 100,000 pounds plus. They’ve written that check without even thinking about it, really. And that money is at risk. If for any reason the firm falls into financial difficulty, then the partners will lose their capital. The benefit of arch.law is that we don’t require any of that capital contribution. For the members moving forward, they’ll have access to their tax reserves, which would otherwise be at risk and also any current accounts. So they’ve got significant cash flow advantages compared to a traditional law firm.
Dom Burch 9:43
And I guess there’s other upsides as well aren’t there. So just maybe talk through an example maybe if somebody’s earning, you know, or delivering, should I say a couple 100,000 year what would they look to be earning from that amount of money?
Andrew Leaitherland 9:53
If you had an arch.portfolio member delivering 200,000 in year one personally, they’d be earning 140,000. If that number was 400,000, though, so potentially them and one paralegal or an associate, then they would generate 287,500 into their personal service company, even after paying an associate, many junior partners would still be earning significantly more than they do at the moment. And in order to illustrate this, we built a calculator which is available. And that illustrates how that revenue sharing breaks down.
Dom Burch 10:23
I really like that calculator. So just for people to be able to visualise it, you go to arch dot law forward slash landing. And then you’ve got this kind of like sliding scale having you where you can push your share along the sort of fader from zero to two and a half million, and then similarly how much revenue you could deliver by referring other arch.law lawyers, is a really, really simple visual way for people to get their heads around how this how this actually works.
Andrew Leaitherland 10:47
Dom, that’s exactly how we intend it to be. So I’m really pleased to hear that feedback.
Dom Burch 10:51
So let’s move on then you’re a virtual organisation, right, so people can be working from home, but also some people are going to want to come together and and work from offices when we’re allowed to do so how do you see yourselves handling that kind of virtual but physical space?
Andrew Leaitherland 11:06
Yeah, we call ourselves a distributed law firm, which I think is the term often used for these virtual law firms. And that’s because they are distributed around the country, people tend to work from home the vast majority of the time. And I think that will be the case moving forward. But I do think that there is a requirement for social interaction. And there is a requirement to build networks, and to meet clients in person when we’re allowed to do so as well. So we’ve created co working hubs in each of the major city locations that we will operate in, which provides dedicated space for people working with arch.law, to regularly meet with each other and to interact with clients, and also to have some social interaction as well. And for me, the workplace has got to be something which is beyond just an office, it has to be somewhere that you really want to go to that you really want to go into and have a proper experience, as opposed to a functional office space, which is, which is the old way of working.
Dom Burch 11:57
And if the photos that I’ve seen are anything to go by Andrew, it’s going to be a place that people want to hang out. It looks looks pretty cool to me. And let’s move on because you’ve obviously got, you know, a number of partners, we’ve talked a little bit already about Brookson One and how they’re sort of that underpinning element of the admin side of things. Just describe the legal ecosystem, if you will, you know, so you’ve kind of got arch.law, but what what sits below it, what’s powering it? How are you bringing those partners together to provide the full service?
Andrew Leaitherland 12:24
We’re a legal solutions business. So this is about providing the right solution to the client. And in the old world, I might try and bring everything under one roof on a fully owned basis. But I think there is a better way of working collaboratively. So we’ve looked at what our client base needs and the smaller end of the marketplace, your your SMB type or founder type client, they require a legal subscription service. So we were looking at a legal subscription provider at the moment who can provide a technology solution for contracts and inquiries for that smaller business on a monthly payment basis, rather than a traditional hourly rate. We’ve announced our collaboration with the Legal Director that I’m also the chairman of and that allows the clients to benefit from a general counsel going into their business on a retainer basis, to look at what needs to be done to assess risk, and to ensure that is delivered effectively. From a legal perspective, we’ve also announced we have a collaboration with SYKE, who are legal tech consulting, that one that you know, very well Dom. And SYKE are there to support with our larger clients in terms of their legal technology needs. The benefit of working with SYKE is they also build our technology platform. So we can try and test a number of things before we talk to our clients about it. Other areas that we’re looking at, at the moment, our managed service providers who can help with the larger enterprise clients in terms of their Document Solutions, and also litigation funders who can provide support across the spectrum in terms of funding disputes, and taking them off off balance sheet risk. So having that ecosystem of providers who are working together, enables the client to have the full solution but also enables the lawyer to have a far more informed conversation with the client as well and be a lot more confident about their ability to win work moving forward.
Dom Burch 13:57
So Andrew just talk me through the actual technology, then that underpins arch.law?
Andrew Leaitherland 14:02
I was really keen to make sure that we had leading edge technology available both for the clients and for the lawyers. It is a key differentiator. You know, a lot of law firms have still got systems that they built 15 years ago, that are glued together with a bit of Selotape or Blu Tack. From my perspective, I wanted to have something which was built very much for the future. So we’ve created different modules. We have arch portal, which is a dedicated portal for our larger clients where they can see their favourite documents. They can access them on an automated basis. And they can view where their particular matters are up to Arch 365, which is a productivity and collaboration platform, again, linking both clients and lawyers together. Arch assistant, which is our onboarding platform, the ability to register new clients matter management through the client portal and also people onboarding. And that will link with providers like Legl, who we use for checks and payment systems, arch.CRM, custom CRM module which allows us to properly understand what the requirements of our clients are in terms of know how updates, for example, rather than just bombarding them with things that they don’t need. And arch.contracts, which is a contract system, which allows us to provide document automation integrated with DocuSign, or electronic signature options that allows us to do compare and contrast with the likes of Summize, which is our preferred supplier in terms of document review. So having that technology approach is really important for us, because it provides a far better solution from both the clients perspective and the lawyers perspective.
Dom Burch 15:30
And it must be very exciting being able to build, you know, from a blank sheet of paper build from the bottom up, rather than being a large law firm and actually trying to bring technology in and sort of, I guess, reverse engineer technology into into an organisation. As you looked out and you planned this kind of modular approach something really exciting just about to go actually, what do we need? And what’s the best way to build it.
Andrew Leaitherland 15:52
That is absolutely right Dom. It’s, it’s great having a blank sheet of paper, it’s far easier, building something from scratch with a specific purpose in mind, as opposed to trying to recreate something or change something fundamentally. And with it being a personal area of interest for me for years, it just allows me to build what I want to build, which I know is going to work moving forward.
Dom Burch 16:12
And I guess being able to build from the bottom up allows you also to structure how the organisation sits alongside your broader responsibilities, you know, the community and environment? What sort of things are you doing, you know, from day one that will make you feel like you’re behaving like a good corporate citizen, as well as delivering for customers?
Andrew Leaitherland 16:30
Big thing for us has been making sure that we recognise our broader responsibilities from an environmental perspective, you know, we we are a carbon zero law firm, we make sure that we reduce our emissions wherever possible. And then we offset as a consequence of our virtual forests that we have within ecology, which is a platform that enables us to plant trees to offset any carbon emissions that we have. We also recognise from a charitable causes perspective, our ability to give back, and it’s something I’ve been passionate about for many, many years. We formed the arch law Charitable Foundation, which will allow us to provide donations to various causes in our communities moving forward as well. The final piece is recognising mental physical health, well being of people both in terms of our people who work within arch.law, but also their immediate families. And that’s why we set up a corporate welfare programme to make sure that they’re supported as well.
Dom Burch 17:18
And we talk a lot in this field these days about tech stacks and about modular approaches. But it really does feel like you’ve got the building blocks in place the foundations there for people to be able to join in the way that they want to join arch.law. But also you can build an entire ecosystem, you know, any scale, can’t you for small, medium, or big, large enterprise clients, you must be very excited about, you know, this launch and getting stuck into this. Well, what is quite a disruptive approach to how law firms run?
Andrew Leaitherland 17:50
Absolutely, I think it is just looking at it through the need of the client through the lens of the client, as opposed to this is what we’ve always done. And this is how we’ve always done it. It’s just taking a very client focused approach to it. And, you know, the feedback so far has been really supportive, which is great.
Dom Burch 18:04
How do you see, you know, this industry, this sector changing as we come out the other side, hopefully, of the pandemic, and looking forward a year from now, where do you hope things will have settled down?
Andrew Leaitherland 18:14
I don’t think big law firms are going to change their approach significantly. I think that there has been a forced adoption of technology, but I think it’s, it’s kind of an inch deep and very wide. I think there’s a lot more that can be done in terms of use of technology. I think there’s a lot more that can be done in terms of different resource models and different remuneration models. But I’m not sure that the larger law firms will engage and embrace on that I think it will be the smaller, more innovative, more entrepreneurial firms that will bring that to bear. And I think people will recognise that they don’t need to be part of a large law firm for a significant proportion of their clients. I think there are other sides to the industry where you know, you’ve got heavily panelised law firms who are acting for big insurers or big banks, and that’s very difficult to move away from but I do think that those heavily panalised law firms need to focus very much on the technology offering and how they pay their people moving forward.
Dom Burch 19:05
Fantastic. Well, listen, Andrew, founder obviously of arch dot law, it’s been great catching up with you and I guess this your plan for this to be a relatively regular podcast every few weeks. Where can people if they’re listening to this, either subscribe to the podcast or just find out more about arch.law.
Andrew Leaitherland 19:20
Go onto our website at www dot arch dot law and you’ll be able to see the link to the podcast there. Also on the iTunes platform where it will be hosted. Please do also subscribe to the to the newsletter through the website and also follow our LinkedIn corporate page.
Dom Burch 19:35
Fantastic. Brilliant. Andrew, thanks so much for joining me.
Andrew Leaitherland 19:38
Thank you
