UK Lawyer Debuts New 'Annuity-Based' Law Firm Whose Clients are Also Law Firm Investors
Forget cash flow. Equity is where it’s at, as far as the law firm of the future is concerned, predicts a well-known lawyer who is now venturing out to stake his claim to this brave new world.
Only three years ago, Matthew Hudson was about to take the helm of the new London office of Proskauer Rose. But the private equity attorney is now hanging his own shingle, with the help of an unspecified number of clients who will also be investors in his new law firm, he explains in a press release.
In anticipation of a law that takes effect in the United Kingdom next year, allowing non-lawyers to have an ownership interest in law firms, just like other businesses, Hudson has created a new law firm model, he says in the release, that will “operate a partnership culture within a modern corporate structure: retaining earnings, paying dividends and attracting external capital from clients and others.
“This legislation should assist the transformation for a traditional law firm away from an annual cash flow model into a long-term balance-sheet-based business, developing an annuity-based and deeper relationship with clients,” Hudson says of the Legal Services Act’s green light to so-called alternative business structures.
The new firm is structured, in part, on a willingness to offer alternative fees: Instead of routinely charging by the hour, the Hudson firm can offer the option of accepting a percentage from a successful fund or transaction or even invest its own money in client ventures, the release explains:
“From now on, clients will want to know that law firms genuinely understand their needs and want to develop a long-term alignment of interests,” it predicts. ” Our clients are both backing the formation of MJ Hudson and using its legal counsel. We are creating a true partnership between our firm and our clients.”
He’s started small, with just a couple of associates from O’Melveny & Myers, and is looking to be to private equity what Wilson Sonsini Goodrich & Rosati is to venture capital, Hudson tells the Am Law Daily.
“I like the expression, ‘Start small, think big, grow fast.’ “
Hat tip to the Dealbook blog of the New York Times.
