Freelancing: a new era?

The number of freelancers in the UK has risen significantly since the turn of the millennium, with professionals from across all sorts of industries seeking to go it alone.

Figures from the Office of National Statistics estimate that the UK is now home to 4.8 million self-employed people, compared to 3.3 million in 2001.

Freelancing is a means of survival for some, where jobs have been lost for example, but for many it is a lifestyle choice; a way of introducing more flexibility into your schedule and potentially mastering the elusive work-life balance.

It is that flexibility, and the low start-up costs that go with it, that appeal to many freelancers. Why commute for several hours a day at extortionate rail prices when you can flick open your laptop from the comfort of your own home and be connected to your clients in seconds?

Why endure the toxic cultures that are rife in many corporate environments and drag yourself up the promotional ladder, when you could just as easily build a business yourself and choose who you do, and do not, work with?

The lifestyle appeals to many for all these reasons but for lawyers, until now, operating outside of the confines of a firm has not been so straightforward. As a sole trader, solicitors must be recognised by the regulator as such and are required to meet the insurance and compliance expectations that would apply to a regular firm.

However, under the Solicitors Regulation Authority’s (SRA) new Standards and Regulations (STARs) it is possible to practice as a freelancer, without all the burdensome requirements that come with establishing your own firm.

The SRA’s hope is that this extra route to market will ease access to justice. If legal advice can be provided more cheaply, perhaps there will be more take up of it. However, the flipside of this is that cheap advice may not be of the highest quality, and critics have highlighted concerns around who the new model might attract, and why.

There are some consumer protections in place. Freelancers are prohibited from holding client money, for example, and will be expected to maintain indemnity insurance that provides “adequate and appropriate cover in respect of the services that you provide”. Here again eyebrows have been raised – is this prescriptive enough to protect the consumer?

Moreover, the new rules mean that there is no statutory requirement for a freelance solicitor to hold professional indemnity insurance, a controversial relaxing of the rules that was rubber stamped by the Legal Services Board (LSB) back in June, prior to full details of the SRA’s proposals being published.

For all these reasons the move was met with some derision from the Law Society, the Legal Ombudsman and the Legal Services Consumer Panel early on. The SRA was slow to release details and the LSB’s backing of the proposals prior to being fully appraised seemed to be careless to many.

However, as time has moved on views appear to be softening. Could the introduction of freelance solicitors to the market not only offer consumers cheaper (and arguably less stuffy) access to the services they need, as well as reducing some barriers to entry for individual practitioners?

A new breed?

Risk and professional indemnity expert, and partner at Legal Risk LLP, Frank Maher is unconvinced that the new rules will be a watershed moment for the industry. He is also concerned that the rulebook does not go far enough in describing what level of insurance cover is required.

“Are we just confusing the public with a large array of regulated lawyers, who are regulated to differing degrees and with various degrees of protection?” he queries. “I’m not sure most of the profession is going to understand it, so will the public understand what they are getting? There are provisions in the transparency rules saying you’ve got to set it all out, but if you get 10 pages of terms, who reads them?”

Maher sees limited opportunity for uptake; perhaps among will-writers who would be able to provide their services under the solicitor brand, or among retiring partners who have a good network of private clients, for example, and may want to keep their hand in after exiting their firms.

While the SRA has removed the need to be three-years qualified to practice non-reserved activities as a freelancer, Maher is sceptical of the idea that younger lawyers with limited experience would be able to build up a reputable business with enough work to sustain themselves.

There has been a trend in recent years for a greater number of over-50s to look to freelance as an income stream. According to research published in November by IPSE, a trade body for the self-employed, there are now almost two million (1,907,000) self-employed people over the age of 50 in the UK, a rise of 58.5 per cent over the last decade. So, the idea that this lifestyle will only appeal to artisan-coffee-swilling millennials camped out in trendy coffee shops is certainly not the case.

That said, Bennett Briegal partner Paul Bennett has become aware of an appetite among younger lawyers to adopt the new freelance status – and in his words, in the long term the industry could be looking at a “seismic change” in the way that lawyers work. “I don’t think it’s going to be seismic on 25 November”, he says. “I think when you look back at least 24 months onwards, then you’ll start to see the trends emerging”.

Bennett says the individuals that have approached him expressing an interest in working under the freelance rules fall into three distinct categories, the largest of which appears to contradict Maher’s expectations of who freelancing may most appeal to.

They are younger solicitors who, according to Bennett, either don’t want to be partners in their firms or may not be considered of partnership quality by the firms they’re currently in. “They’re people for whom it’s probably quite a challenging and quite a dangerous model because freelance solicitors have personal liability, you can’t trade through a limited company and you can’t trade through an LLP”, Bennett explains.

“So even if you’re not doing reserved activities, if you make a complete hash of something and somebody sues you – they are going to be suing you personally, and if your insurance doesn’t meet the solicitors’ minimum terms and conditions as a law firm’s would, and there are exclusions for some reason, then obviously it’s your personal assets that are at risk”.

Those risks are very much in line with the reasons that Maher believes many will shy away from going freelance under the current regulations. Despite the risk though, Bennett can envisage success for some of this group.

He likens the risk to that of barristers at the self-employed Bar. “You’re talking about that sort of personal liability for barristers anyway”, he says, “albeit the insurance is a mutual fund”.

Bennett says freelance solicitors are likely to end up with insurance policies akin to those taken out by professional consultants. Of that first category, Bennett says: “There will be a number of people who do well out of it and who perhaps aren’t well suited to being in a partnership, who perhaps aren’t particularly collegiate. They are a bit of a lone wolf, and it will suit them down to the ground but it’s really important that they understand the risks”.

The second largest group Bennett has seen emerge are those whose legal career seems to be stalling for whatever reason. “Perhaps they lack experience, perhaps they have been let go by a firm and they see this as a way back into the profession”, he explains.

For this group, the potential to carve out a successful freelance legal career is slim. They run the risk of failing to build up a sustainable client base and if they lack experience could run into professional negligence issues very easily.

Commercial threat

Perhaps more in line with Maher’s expectations, is the third group that Bennett says he has seen emerge most recently, in the last four or five months. These are extremely senior lawyers, including a handful from magic circle firms, who are approaching the end of successful careers.

“They’ve got really strong client relationships. Perhaps they’re coming to the end of their career as very senior partners. And they want to work two or three days a week, they want to work on their own accounts. They’ve got quite a lot to offer, but rather than doing large transactional work, perhaps focused on softer advisory stuff ”, Bennett says.

For these guys setting up shop as a sole trader would be too much work and too great of a risk, but as freelancers they can take a slice of the work they are already doing with them. Bennett sees this emerging group of, until now, somewhat unlikely candidates for freelance positions as having the potential to alter the landscape for law firms.

“If you’ve got somebody really senior and credible giving day-to-day advice to the owners of a business or to a fairly substantive client, firms are going to have to adjust how they interact with those individuals. Historically they would retire, and their client relationships should probably be passed on. The risk for firms now is that they will stay as a key advisors to those clients”, Bennett explains.

He characterises these individuals as the types that would often seek a non-exec or board appointment with one or two of their former clients. “They’ve got some real gravitas”, he says. “For me, that’s where I can see them taking work, not only from the firm they worked in but from others if they establish themselves as a chief adviser to these businesses”.

Moreover, what Bennett has observed is that most of those approaching him for advice are doing so with the intention of practising reserved activities, which puts them in direct competition with their law firm counterparts.

Design for life

One solicitor who understands the urge to break out on her own is Linda Lamb, formerly a partner at a large regional firm, but now a successfully established sole trader, with her own business LSL Family Law.

Lamb was a midwife prior to retraining as a lawyer in Scotland, and subsequently qualifying to practice in England in 1995. She worked her way up to become an equity partner in her firm, and in 2011 she decided to break away and set up a boutique business as a way of getting closer to the client work and creating a more flexible work-life balance.

However, after a few years of growth, the administrative requirements of running a firm – albeit a small one – began to eat into the time she had for client work again and Lamb decided to become a sole trader in 2017. “Now, I have this fantastic way of life where I’m effectively in my office within one minute”, she says.

Lamb has reservations about the freelancer model. She says if she were to do it all over again now, she would be unlikely to go down that route, particularly so soon after the new rules being introduced. “Like anything that’s new, people are going to be a bit sceptical and I might be concerned that people referring to me might think I’m something ‘less’”.

She is also concerned that the STARs gives such limited information on how to risk assess your business and work out what level of insurance cover you need. For the uninitiated, this could cause a real headache.

But overall, Lamb is clear that what she didn’t want to do was create a business that could be defined by its cost-effectiveness, or – more bluntly – appeal to clients because it was cheap, as some are predicting will be the case with freelancers.

“I’ve maintained my name in Chambers, I’ve got good referral networks and I get really good quality work”, she says, “I get referrals from commercial firms in London, so it’s good work and I didn’t want to lose that”.

Lamb’s USP is keeping the business streamlined enough that she is able to be totally hands on with her clients. She is not distracted by the machinations of law firm culture, or the massive demands of compliance in a larger business. She employs an administrator a few days a week, uses Moneypenny as a remote secretarial service, which answers her phone and fields calls appropriately, and beyond that she is a big fan of using technology to lighten the load for herself and her clients.

“I work off a cloud-based system, I’m paperless and most of my practice is run on apps”, Lamb explains. While she concedes there is a cost to using technology (Leap is her favoured legal software), she argues that it is commensurate to the quality of service you want to provide. She recently discovered an AI system that enables clients to submit details to her themselves, saving time on the more administrative tasks at the start of an instruction.

“When I see something that I think would benefit my practice – I’m not into technology for the sake of technology – but if I think it’s going to be beneficial, then I go for it”, she says.

Tech driven

There is clearly something of the entrepreneur in Lamb, as there is with many of the most successful self-employed professionals. But her affinity to technology and the ways that it can heighten the quality of service she provides her clients takes me back to Bennett’s biggest group of budding freelance lawyers – senior associates looking for an alternative to partnership.

Among them, Bennett says there is a contingent whose practice is by definition tech driven. The niches they are building their reputation in are so specific he refrains from describing them to avoid inadvertently identifying them. “They are pretty much the only lawyers ploughing that furrow”, he says, “and you can see why freelancing is attractive to them because they have the reputation in their sectors.” Consequently, the clients of these individuals are already, in effect, trading with them and not their firms.

Bennett believes that tech-driven clients will be the natural home for an emerging tranche of freelance lawyers – not only are they niche areas of practice in which individuals can carve out a client-base, but they understand the culture of the self-employed; the flexibility, the webchats and the fact that being in an office nine-to-five every day is not always the most efficient way to work.

“Personally, I think this is an area that over the next five years is going to develop”, Bennett says. “And, if I tell you that one of the things that I’ve done as a consequence of the discussions I’ve had is I’ve started looking heavily at lawtech and fintech, and the technologies around that, that probably gives you a useful steer on the sort of technology driven businesses I think these freelancers will head to.”

With the SRA so keen to see progress in lawtech, it’s not hard to ignore the idea that freelance solicitors working with tech-driven clients might be the missing link that develops ‘the app’ to revolutionise legal services provision. Could it be that this much maligned regulatory update, in the long term, holds the key to pushing legal services forward? We waited for Tesco Law and it never really arrived. Might the addition of freelance solicitors be a revolution waiting to happen under the radar?

Hannah Gannagé-Stewart is managing editor of Solicitors Journal