Consultant Solicitor Fee Sharing – What Is The Best Model For Solicitor And Owner?

What is the right consultant solicitor fee sharing model for both the law firm owner and the consultant solicitor? This article explains my model and the reason why it works for both parties.

Consultant Solicitor Fee Sharing Models - The Best

Should the consultant get 50% of the fees billed, 60% of fees billed or 70% of fees billed?

For me, despite the consultant solicitors model being relatively young, I am still surprised at such a variety of offers and also, perhaps more surprisingly, how little thought goes into the consultant fee share arrangement from both parties!

Let me put some meat on the bones as to what I mean here by looking at each of the parties to a consultant solicitor model.

Nick Jervis, Consultant Fee Sharing Adviser
Nick Jervis, Solicitor (non-practising)

First, allow me to introduce myself. I am Nick Jervis, Solicitor (non-practising) and since 2003 I have been working with law firm owners to grow their businesses quickly. In the last few years, I have also been working with a lot of consultant solicitors who are keen to grow their following. I am fascinated with the consultancy business model, particularly with the fee sharing aspect which, I believe, most people are getting wrong. Let me share with you why.

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Consultant Fee Sharing From The Law Firm Owner’s Perspective

I have heard this presented by a large number of solicitors, summarised as:

“Well, they don’t really cost me a lot so anything that they bill for me is better than nothing.”

I have to say, I think this is completely the wrong way to look at it. Any member of staff, consultancy or employed, costs time and money, and perhaps more importantly, represents your firm to the outside world.

Even more importantly than that, you are running a business. That business should be as profitable as it can be to ensure that you, the law firm owner, can be properly rewarded for the risks that you take in running your business.

If you do this properly, your consultant solicitors should make you a great deal of profit. In fact, they should probably make you more profit than your employed staff because they are financially motivated to do so – if you set the right deal that is – more on that later.

Consultant Fee Sharing From The Consultant Solicitor’s Perspective

You are in an employed position and you look at the fees that you generate for your firm and can see that if you were a consultant solicitor you would earn a lot more than you currently do.

You decide that now is the time to jump ship. However, sadly you make the mistake that most consultant solicitors make: you look for the best consultant fee sharing model for you personally; i.e. how can you keep the lion’s share of your fees?

Why is this the wrong thing to do?

Until now, all of the work that comes your way has been generated by the marketing of the firm that you are leaving.

Where are your new instructions going to come from when you become a consultant? Whilst you fee sharing model may be amazing if you bill well, you must be able to generate new clients. It is likely that you will only have one small page on the consultancy firm’s website, but that is it! How are you going to generate clients?

Which leads me onto this:

The Consultant Fee Sharing Model That Works For The Consultant And The Law Firm Owner

For this consultancy model to be successful, it has to please both parties:

  • The law firm owner has to make a decent profit, arguably equal to what they make if they simply employ someone rather than use the consultant model; and
  • It has to produce at least the same income for the consultant solicitor.

Let’s imagine the employed consultant was billing £150,000 per annum and earning a salary of £50,000, which under the old 1/3rd, 1/3rd, 1/3rd model works out correctly.

For the consultant to earn at least what they were earning before, they need a one third share for them, two thirds share for the law firm owner.

However, most deals seem to be in favour of the consultant, which I find absurd, for the reasons to follow.

Imagine the consultant solicitor negotiates a 50/50 fee share (many I know get more, but that, in my opinion, is not sustainable).

The consultant’s eyes light up when they think that they will soon be earning £75,000 based on their current fee levels, a 50% increase on their salary with the additional tax benefits of working for themselves.

However, what happens is that they start their new job and very quickly realise that they will be lucky to get anywhere near their last salary because they have no new clients. They are not undertaking any marketing because they have never had to, and the law firm owner doesn’t feed them many new clients or any at all.

This is not a mutually beneficial relationship. It is not, in my opinion, sustainable.

What is the answer then?

A fee split very much in favour of the law firm owner, but with the proviso that they will do all of the marketing for their consultant solicitor.

This will work so much better because:

  • The law firm owner will have ‘economies of scale’ when it comes to marketing. They will have more than one consultant and can market all of their services at the same time through the same website; and
  • The consultant, whilst having a lower fee share, will not have to do any marketing or much administration at all, allowing them to exceed their billing targets at their previous firm and now earn more.

Meat on the bones of this consultancy fee share model.

Let’s go with a 70/30 fee share model in favour of the law firm owner.

The consultant waits for the work to come in and when it does works very efficiently as they have nothing else to think about. Within 18 months they are up to £200,000 billing per annum.

Their income now is 30% of £200,000 = £60,000.

Their income will rise further still as their consultancy model matures, but they now have a larger income, set their own schedule each day and have more control in their life.

The law firm owner is now making £140,000 from the consultant, which, after taking out administration costs, means that he or she can invest properly into marketing their services to generate the clients that they need. This allows them to continue to invest in their website, marketing their services via Google Adwords (in my experience the best way of generating clients for solicitors in different geographic locations) and control all new client conversion for all consultants so that the first time a consultant speaks with a new client all they have to do is the legal work.

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