Don Clarke + Christina Blacklaws
Plenary 3: Becoming an ABS
Christina Blacklaws, Director of Policy
Co-operative Legal Services
Don Clarke, Director of Strategy, Keoghs
  Don Clarke
    Keoghs LLP
      £60m turnover
      50 partners
      1,050 staff
      Bolton, Coventry, Manchester
      Corporate structure
      Defendant dispute resolution. No claimant, no corporate law
    Getting ready
      Don't put the cart before the horse
      Articulate your vision & strategy
      Have a clear 3yr business plan
      Understand your Partners' objecgives
      Then and only then, decide on your business model
    Choosing the route
      Commoditisation of services (£1,000 previously now only £350/case)
      Further consolidation of the market e.g. insurers
      Developing the corporate model
      Requirement for further investment (systems & processes)
      Desire to maintain control AND realise some capital value
    Deciding on an investment partner
      Primary lending - banks?
      The Partners - decided not to
      Outside investment means sharing future profits
      Why Private Equity?
        They understand consolidation & acquisitions
        Did not want to increase Partner debt or primary lending
        Wanted help developing the corporate model
        Larger funds to develop their strategy
        PE encourages more entrepreneurial model
      Advisers were crucial
        Doing the research
        Explaining our objectives
        Articulate your strategy & vision
        Advisors
          Legal = DLA
          Accountants = Deloittes
        The prospectus - vision, strategy, finances & plans - for 3 years
      Due diligence
        Lots & lots & lots
        Around the business plan & sales numbers
        Interrogation & dissection of budgets & forecasts
        Crucially it has to be a two-way process
    The process
      The SRA
        Maintain a good relationship throughout
        Be realistic about the process & timeframes
        A great deal of information needs to be submitted
        You will require a great deal of internal resource at your end
        The SRA require information about ALL of your business
        Took Keoghs around a year in total
    Dealing with the Partners
      To tell or not to tell?
      It's incredibly distracting
      Keep the deal team tight. Invite the Partners only when necessary
      Importance of the go/no go meeting
      Keep them out, but keep them informed
    Communications
      Be open with clients
      Be open with the staff
      Less open with the media if you can
      Have one spokesperson
    Conclusion
      Huge amount of time on the warranties & legal's generally
      Contractual consents may be required (from clients)
      Completion conditional on SRA approval
      Set aside a weekend (or two, or three.....)
    Learning points
      The costs can be eye watering
      Be realistic about them
      Make sure costs are "contingent" if possible
      Track "online submissions"
  Christina Blacklaws
    The Co-Op
      5,000 retail outlets
      7.5m members
      5th largest retailer
      Largest funeral provider
    Co-Op Legal
      Launched in 2006
      Limited services to their members
      Became an ABS in March 2012
      The first consumer brand to be approved
      Offices in Bristol, London, Manchester
      £34m turnover in 2012
      < 600 staff (growing daily)
      "Here for you for life" - brand strapline
      Our difference?
        Clean sheet of paper to start from
        Needed an ABS license which took time
        Focus on consumer issues
        Had time to look at the market
        Profit important but also social goals as a "mutual"
        All employees, no "Partners"
        Opportunity to fill the gap left by LASPO
        78 face-to-face Legal Aid contracts
        One national telephone Legal Aid contract
        Working with Manchester Metropolitan
Uni to develop young people
      What do we share?
        Professionalism
        Commitment to quality
        Engagement with the legal community
        Access to justice
        Desire to be commercially focused
        Highly focused management board
      Our place in the market
        Value for money, transparent & fixed pricing
        Wide appeal across England & Wales
        Have a great brand to leverage
        Access the membership & cross-sell from group businesses
        Continue to deliver Legal Aid
        Consumer champion
        Promotion & delivery via banks may grow
      Work collaboratively
        Work with the Bar & Mediators
        Vast majority of work done inhouses
        Entering period of rapid growth
        May have an external legal panel as required
        Developing their IT systems
        Here for the long term
      Regulation & brand
        Must not have brand damage
        Compliance team has grown five-fold since 2006
      The scramble for talent
        Looking to grow to 3,000 people
        That's 6x growth
        Putting the consumer first
        Lawyers have a careet choice - law or operational
        MMU initiative
    Is Private Equity the right choice?
      Lots of different models
        Bank debt
        Partner debt
        External investment
      Standing still is not an option
      Progress involves investment
      Timescales are longer than you think
      Need to be committed to the outcome