1. Will Quality Solicitors’s Business Model Disrupt the
Market for Legal Services in the United States?
Business, Law, and Innovation April 18, 2012
Presenters:
Robbie Carman
Brian Peterson
Professor:
Adam Dell

2. Overview
1. The Concept: A National Brand for Legal Services
2. A Newfound Market Opportunity
3. Breaking Down Quality Solicitors’s Business Model
4. Will Quality Solicitors’s Business Model Disrupt the Market for
Legal Services in the United States?
5. Conclusion

3. The Concept: A National Brand for Legal Services
The Traditional Model
• People that need
“Lottery” • Lawyers
lawyers
• Ask friends/family
• Yellow book
• Google
But who? $$$

4. The Concept: A National Brand for Legal Services
A New Model
Connect to
• People that Brand • Lawyers
need lawyers • Familiar and
trusted entity
But who? $$$

5. The Concept: A National Brand for Legal Services
What Can Branding Do for You?
“You can have all the facts and figures, all the
supporting evidence, all the endorsements that
you want, but if at the end of the day you
don’t command trust, you won’t get
anywhere”
Niall Fitzgerald (2001)
Former Chairman Unilever;
Thompson Reuters

6. The Concept: A National Brand for Legal Services
In January
2009, Concerto
Marketing and Research
Now completed a study
into the benefits and
drivers of brand trust.
The study surveyed 1000
North Americans from
Consider this… Research Now’s panel of
online respondents

7. The Concept: A National Brand for Legal Services
The study found that when people
trust a brand…

8. The Concept: A National Brand for Legal Services
83%
…will recommend
it to other people1
1. http://www.business2012.com/2012/02/build-trust-in-your-brand/

9. The Concept: A National Brand for Legal Services
82%
…will use its
products
& services
frequently1
1. http://www.business2012.com/2012/02/build-trust-in-your-brand/

10. The Concept: A National Brand for Legal Services
78%
…will look to it first for the
things they want1
1. http://www.business2012.com/2012/02/build-trust-in-your-brand/

11. The Concept: A National Brand for Legal Services
50%
…will pay more for
its products and services1
1. http://www.business2012.com/2012/02/build-trust-in-your-brand/

12. A Newfound Market Opportunity
The Legal Services Industry in the U.K.
BIG FRAGMENTED
U.K. Legal Services
Market1 Approx. 10,000 firms2
Vast majority < 25 solicitors2
£11,890,000,000
£13,110,000,000 Survey: 72% U.K. partners
believe “substantial”
consolidation necessary3
Top 50 Law Firms
The Rest
1. http://www.law.com/jsp/law/article.jsp?id=1202504293111&UK_Top__Law_Firms_Post_Best_Growth_Figures_Since_
2. http://www.palamon.com/press/index.php?read=73
3. http://www.legalweek.com/legal-week/analysis/2159583/partners-believe-fragmented-legal-industry-set-intense-merger-
run

13. A Newfound Market Opportunity
New Legal Ethics Rules
 Lawyers prohibited from
forming partnerships with
non-lawyers
Old  Non-lawyers cannot have
Rules ownership interest in law
firm Managers and
 See ABA Model Rule 5.4
entrepreneurs with
business expertise
 Non-lawyers can own up can now “run” law
to 25% of law firms1
Legal  Expressly authorize
firms
Services creation of “Alternative
Act of Business Structures1
2007
1. http://www.sra.org.uk/abs/

14. A Newfound Market Opportunity
What does this mean for the consumer?
Better
Lawyers
Managers
Outside
Technology
Capital
Greater
Access

15. Analysis of Quality Solicitors’s Business Model
Unit Economics
High Low
Specialized
Services
Client’s Perception of Client’s Price
Client-Tailored Sensitivity
Matter’s Importance Services
Standardized
Low High
IMPORTANT: Perceived Value ≠ Profitability
•Simple task, efficiently delivered many times = $$$$$$
•Complex task, inefficiently delivered one time = (-$$$$)

16. Analysis of Quality Solicitors’s Business Model
Unit Economics
Law firms can be cash cows because once a certain threshold is
passed additional revenue can be generated very cheaply
Break-Even Point
Gross Revenue
Profits
Other Overhead
Compensation
& Benefits
Hours Billed

17. Analysis of Quality Solicitors’s Business Model
Unit Economics
Unit Economics Estimates Assumptions
QS’s ROI = 25% Revenue
– Generates £ 250m per year – £1,250,000 per firm, annually (av.)
– Spends £200m per year to generate • # of Locations in 2011 = 2001
that revenue • Enterprise-wide gross revenue = £ 250m1
This Number Will Go Up Costs
– Marketing costs will decrease as – Compensation = 50% of costs2
brand gains notoriety • Total salary spend = £ 500,000
– Efficiency will increase over time - Associate = £ 50,0003
- Partner = £ 100,0003
– Large pent up demand  the “little
- Average office has 6 associates and 2
guys” under utilize legal services partners
1. http://www.legalweek.com/legal-week/news/2131113/law-firm-innovation-award-qualitysolicitors
2. Stephen Mayerson, Making Sense of Law Firms, pg 418 (2006).
3. http://www.law.com/jsp/tal/PubArticleTAL.jsp?id=1202489360193

18. Analysis of Quality Solicitors’s Business Model
Recruiting Law Firms
Client
What Network Feedback
does QS
look for?
Reputation
 Firm must commit to highest level
What of customer service
must law  On average, commit 5% of all
firms revenue to QS1
commit?
1. http://www.lawgazette.co.uk/news/private-equity-takes-stake-qs

19. Analysis of Quality Solicitors’s Business Model
The Competition
Corporate Legal Services
like…
Franchise-type Brands Online Legal Networks
like… like…
Small Big Law Firms
Practitioners like…
like…

20. Analysis of Quality Solicitors’s Business Model
Competitive Advantages
 Consumer peace of mind
Brand Power  “One less choice we have to make” 1
 Internal training department with emphasis on “soft”
Economies of skills
Scale  Huge marketing advantage giving unparalleled access
to untapped markets
 Gain control of consumer trust and confidence
First Mover  Switching costs – late entrants must invest extra
Advantage resources to attract away from trusted brand
1. http://blog.qualitysolicitors.com/2012/02/06/and-theyre-off-the-race-to-capture-the-consumer-is-finally-underway/

21. Analysis of Quality Solicitors’s Business Model
Competitive Advantages
Service Brand
Visibility
Innovations Strength
Market
Prominence
(Dominance?)

22. Analysis of Quality Solicitors’s Business Model
Network Effects
Number of Users
Indirect
Network
Direct
Effect
Network
Effects
Consumer QS Market Complementary
Trust/Ratings Share Services
Positive
Feedback
Loop
Number of advertisers &
partners

23. Analysis of Quality Solicitors’s Business Model
Technology - Yelponomics1
As we might
expect, higher ratings
leads to higher
reservations
Additionally, more
reviews, not taking into
account ratings, leads
to more reservations.
Why?
1 http://blog.launchcopilot.com/2011/04/25/yelponomics-what-really-drives-yelp-reservations/

24. Analysis of Quality Solicitors’s Business Model
Technology – Web Enabled Document Assembly
Powered By: Answer Questions Client Pays A
Online Fixed Price
Attorney Reviews
Pre-existing
Document

25. Analysis of Quality Solicitors’s Business Model
Branch Growth1, 2
600
500 500
400
300
220
200
170
100
0 0 1
Aug-04 Feb-05 Sep-05 Mar-06 Oct-06 Apr-07 Nov-07 Jun-08 Dec-08 Jul-09
1. http://www.lawgazette.co.uk/news/private-equity-takes-stake-qs
2 http://www.guardian.co.uk/money/2011/apr/03/uks-first-chain-high-street-lawyers

26. Analysis of Quality Solicitors’s Business Model
Turning Heads
Last fall, Quality Solicitors secured
investment from European private
equity firm, Palamon Capital Partners.
While the exact amount was kept
confidential, Palamon’s investments
usually range from €10m to €80m.1
Palamon  €1.1bn funds under management1
Capital  Experience operating in fragmented professional services
Partners markets (specifically, dentistry and financial services)1
Overview
1. http://www.legalweek.com/legal-week/blog-post/2118742/qualitysolicitors-secures-private-equity-backing-deal-silence-
critics

27. Will the QS Business Model Disrupt the Market for
Legal Services in the United States?
Catching the Next Wave of Innovation
Clayton M. Christensen Vijay Govindarajan
• Harvard Business School • Dartmouth – Tuck School of
• Disruptive Innovation Theory Business
• Reverse Innovation Theory

28. Will the QS Business Model Disrupt the Market for
Legal Services in the United States?
Disruptive Innovation Theory1
1. Seeing What’s Next: Using Theories of Innovation To Predict Industry Change, Clayton M. Christensen

29. Will the QS Business Model Disrupt the Market for
Legal Services in the United States?
The Motivation/Ability Framework and Regulations1
Motivation Determined By:
•Market Size/Growth
High
•Competition Looking
The
•Economics of Opportunity For A
•Business Model Hotbed
•Industry Attractiveness
Target
Motivation
Government Levers:
•Taxes
•Competitive Policy Looking
•Rate Regulation The
For
Dilemma
Money
Low
Ability Determined By:
•Resource Availability
•Market Access Low High
Government Levers: Ability
•Standards = Legal Ethics Rules
1. Seeing What’s Next: Using Theories of Innovation To Predict Industry Change, Clayton M. Christensen

30. Will the QS Business Model Disrupt the Market for
Legal Services in the United States?
Application to the Legal Services Market
 QSWill Unlock The Huge Potential Of An Underserved Market With Low
Expectations
– Must be cost-conscious
– Must be high quality  but it’s easier to do simple things well
– QS brand gains high visibility  gains big market share in “low tier market”
 The US Will Change Its Ethics Rules
– If UK ABS firms are successful then US firms will want in  more pressure to change
rules
– As experience builds and technology advances  ABS firms will move up the chain of
customers
 Eureka! = Disruption
– Eventually ABS firms will figure out how to do complex work far more cheaply than high
priced incumbents

31. Will the QS Business Model Disrupt the Market for
Legal Services in the United States?
Amplifying Weak Signals
The Small Things that Indicate Big Changes
– ABA Heavily Considering Allowing ABS1
– Jacoby & Meyers Sue State of New York 
Challenge Constitutionality Of No Non-lawyer
Investment Rule2
– North Carolina Senator, Fletcher Hartsell Proposes
A Bill That Would Allow Minority Non-lawyer Ownership (49%)3
– Many Large Law Firm Partners Unaware of Changes or Unconvinced That They
Will Have Any Effect On Them
1. ABA, Issues Paper Concerning Alternative Business Structures, April 5, 2011
2. http://www.lawcrossing.com/article/7527/NY-Court-Upholds-Ban-on-Non-Lawyer-Investment-in-Law-Firms/
3. http://www.abajournal.com/news/article/nc_lawyer_and_lawmaker_introduces_bill_that_would/

32. Will the QS Business Model Disrupt the Market for Legal
Services in the United States?
Conclusion
- European countries now allow
Outward non-attorney ownership/investment
in law firms1
Pressure
-Globalization of legal services
industry1
- Increasingly Expansive and
Complex Regulation of Private
Conduct = Greater Demand for
Legal Services by Normal People1 Inward
- Lack of Access to Good Attorneys Pressure
Due to Cost1
- Lack of Knowledge About Which
Attorneys Are Good1
1. http://www.nytimes.com/2011/10/29/business/selling-pieces-of-law-firms-to-investors.htm