The Law21 blog, and this post in particular, should be compulsory reading for any member of the British legal profession. The focus on new provision of legal services tends to concentrate on work for individuals - divorces, probate, and so on. In employment law circles however the change is already happening. First Assist, Peninsula, Croner Consulting, EEF and the rest are hardly household names but between them conduct a huge part of Respondents’ litigation in the tribunals.
Many employers simply want to pay an annual premium and be insured against any claims they receive. Any large employer, even if it is well behaved, will receive a claim one day, and fewer and fewer of these are farmed out to traditional law firms and counsel. If you are a commercial company who has sold an insurance policy then it makes much more financial sense to hire staff yourselves to conduct litigation and advocacy than to farm it out. Why? Because you retain the profit margin. Without any SRA or Bar Council regulation you can also be ultra-competitive in your hourly rates which means you achieve a better loss ratio for the insurance company.
Counsel still have their place for complex cases, or for where you simply must have a bum sat on a tribunal seat somewhere far away at very short notice, but as the Law21 blog notes: traditional law firms must forge alliances with the larger providers if they are to retain the work.
Employment is ahead of the game as tribunals don’t require a special right of audience, and (insured) work can therefore be undertaken by companies without any form of regulation at all. Once Alternative Business Structures and “soft-touch” regulation comes then all manner of commercial legal areas will go the same way, and it’ll be sink or swim for law firms and lawyers. Being legally qualified will be no guarantee of a place in the new order.
Problem is that if you offer insurance like Peninsula you potentially have two clients: the insurer and the insured. Those two clients interests are not always aligned and sometimes conflict. So an employer may want to fight a mischievious claim as they want to send out a message, whilst the insurer may want to settle at a commercial rate, say £2k. Who does the lawyer listen to, the insured or the insurer?
Likewise as the lawyer is giving advice covered by an insurance policy, that advice may sometimes be far too cautious-in line with the insurer’s commercial interests but out of step with the insured’s commercial needs.
The new landscape will present many problems like these. We find that clients do not change legal provider readily or easily.
I don’t actually disagree with much of what you’ve said there - the function of an employment lawyer is different to an insured HR compliance product. The word compliance is key - the product says to the employer “I will tell you how to act correctly from a legal and HR perspective. I’ll provide you with documentation, procedures and telephone support for what you want to do, and as long as you do exactly what I say I’ll pay the bill if it all goes wrong.” You preach HR orthodoxy to the client and pay for any mistakes in what you advise. Most competitive insurance policies no longer have a ‘reasonable prospects’ requirement before a claim is accepted, they instead have a requirement that you only do anything once you have their blessing. This means the advice function is very thorough - most services I’ve come across are professional enough so that if a dismissal can be done then it’ll be approved, but it’s interesting that you’ve picked out Peninsula …
What that product doesn’t necessarily do is accomplish your wider objectives which is where the conventional taxi-meter lawyer comes in. His remit is much wider, and there will always be a need for him, but for many small businesses it’s choosing the most cost-effective tool for risk-avoidance.