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Is It Time for a National Retail Law Firm?

I came into the legal profession in the early 1990’s, just as the age of the “national” law firms was dawning. The big downtown Vancouver firms of my formative years – all independents – were soon swept up in a maelstrom of merger mania with their equivalents in Toronto and Montreal. When the dust settled a few years later, we had the basic framework of the large law firm landscape that has prevailed in this country for the better part of the past two decades. In the ensuing years the nationals built out their networks with offices in Calgary, Ottawa and satellite offices internationally, but the basic model has continued largely unchanged until the very recent arrival of the “globals” (Norton Rose, Dentons, & others soon to follow).

These firms for all their myriad nuances of difference are in a larger sense all of a kind – business law firms primarily serving national and international corporations. The logic behind the formation of the nationals and now the globals was and is straightforward enough – scaling up in size to parallel the scope and geographical reach of their preferred client base.

What has never been part of the equation in this country however is a large firm with a national footprint focused on individual purchasers of legal services – personal injury, family, wills & estates, and residential real estate. Call this market segment what you will – “consumer law”, “personal legal services”, “retail law” or something other – Canadian firms in this arena have entirely avoided the tendency towards significant geographic expansion experienced by their corporate law cousins.

Some of the reasons retail law firms have remained small and local seem obvious enough. First and foremost, the client-driven rationale behind the merger frenzy of the business-law firms was absent in retail practices. While a national or international business client had very good reason to want harmonized legal service from coast to coast, Sue and Bob Smith in Nanaimo who needed a real estate conveyance or a separation agreement didn’t care one whit if the firm providing the service offered the same thing to Sergio and Theresa Ambrosino in Burlington, because the service was intrinsically local in nature.

Second, for business law firms ramping up into national and international entities, I would argue the change was one of degree, not of kind. This is not to diminish the challenges involved in business firm mergers, but the firms that combined to create the nationals in the 1990’s were already large organizations with all of the attendant organizational systems and protocols companies of such magnitude require. Developing the national firm infrastructure required a harmonization of parallel corporate systems and adding a national coordinating structure at the top, but not a re-evaluation of every aspect of the underlying business. Likewise, the new global firms are typically opting for a Swiss Verein structure, meaning that the underlying national business constructs remain fundamentally intact.

Conversely, for a group of small retail law firms to go national would historically have required a fundamental rethinking and reorganization at the very core of how such firms have traditionally operated. A 10 or 15 lawyer retail firm covering a handful of personal service practice areas reconstituting as part of a 300+ lawyer national firm would have meant throwing out the old owner’s manual and starting from scratch, moving from what was essentially a small-business management system to a much more corporate model.

That being the case, is there now a rationale for why we could see a national retail law firm arise here? I believe there is – and at its core the rationale is marketing (with an assist to technology).

All of us immersed in the legal industry know dozens of firms and hundreds of lawyers, and would have little trouble sourcing suitable counsel for any given situation. But average Canadians typically have little or no experience with lawyers in their day-to-day lives, and when the time comes that they need personal legal advice or services, they are starting from a dead stop in their search for a lawyer. Out comes Google, an inquiry to their neighbor or co-worker, or even the Yellow Pages (remember those?). For many consumers, hiring a lawyer is akin to the process of looking for a plumber – find yourself in the soup in need of urgent help, ask around, get a recommendation, have a look at their website or ad to put your mind somewhat at ease that it’s a legitimate operation, and then hold your breath and make the call. Pray for luck and dive headfirst into the abyss of the unknown.

Contrast that scenario with a company like H&R Block for personal tax preparation. A consumer might have no more practical experience with H&R Block than with a local law firm prior to engagement, but in the consumer’s mind, H&R Block is a known entity as a result of their top of mind brand awareness, and the result has been a decades long dominant market position for the company.

The first small steps towards a more consumer-oriented branding approach in the Canadian legal market might already have been taken when we recently saw three prominent Ontario personal injury firms team up on a joint marketing initiative under the banner of the “Personal Injury Alliance” in order to pool some of their respective marketing budgets into a collective effort with high cost/ high production value commercials in order to obtain more bang for their buck as it were. It is a tremendously intriguing gambit on the part of the firms involved and I give them full kudos for implementing it, but it nevertheless represents an interim phase to my mind. For if it is successful in generating better returns than each would have mustered individually, logic dictates that as the combined brand grows in stature and power over time, it makes less and less sense to also be devoting funds to maintaining three separate individual firm brands in addition to the combined brand. Having a joint marketing function for separate firms that operate and otherwise compete in the same geographic market also seems less optimal than dispersing the joint marketing expense amongst a group of practices that don’t compete with each other – i.e. by distributing it between parallel firms operating in different regional markets.

The U.K. precedent for a national retail firm is already in place: Quality Solicitors.

The gradual loosening of inter-jurisdictional practice rules, the twenty-year track record of Canadian national law firms in the business context, the increasing automation of basic processes and utilization of standardized technology tools like practice-management software in even very small practices, and the increasing competition from non-lawyer service providers and self-help options all suggest to me that a similar national retail law firm in Canada isn’t far-fetched. A franchise model seems a distinct possibility. The big question in my mind is not whether it’s coming, but rather who is going to build it? Over to you. . .

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Comments

  1. Nice.

    We are now overdue for this type of initiative to improve access to justice.

    Capital infusion will be needed to make this work – which makes the ABS discussions that nearly every law society in Canada is having right now, critical.

    Will law societies rise to the occasion or remain mired in an historical error of judgment?

  2. Brilliant post! But I think Mitch’s comment is right on too. The regulatory prohibition on non-lawyer capital and ownership of firms is a major roadblock for the large-scale retail law firm model.

  3. Truly thought-provoking. It’s wonderful to start imagining what the next generation of lawyer-entrepreneurs might do to empower the average legal consumer…

  4. Great post Doug. It completely makes sense. I wonder when lawyers will realize that the legal industry will follow ALL OTHER INDUSTRIES (eventually). You make a great business case for this to happen. Thanks

  5. Good post. A national retail law firm would need a much different model than a national corporate law firm, particularly if improving access to justice is a goal. Most of those national firms had retail work which they began to shed in earnest from the late 90’s, as being unsuitable/unprofitable.

    Perhaps something like LegalForce has created in Palo Alto? Assuming that they will spread across the country if the model works. (Here’s one article on it for reference: http://bit.ly/YLPoW9 ) Fits with the H&R Block analogy.

    Interesting piece. Thanks.