Globalization and large-scale expansion can be glamorous and transformative for law firms, but what often gets drowned out in the excitement is that the process doesn’t work for everyone. The larger and more diverse a firm becomes, the more conflicts it is likely to generate, which can constrain the practices of individual partners, while others may see their practice areas marginalized as strategic priorities change. Not surprisingly, we’re seeing more new firms being formed by teams spinning off from larger law firms.
But becoming an entrepreneur isn’t easy. In a sign of how well-trodden this particular path out of Big Law has become, there’s now at least one specialty consultancy to help boutique founders get their new firms up and running.
Established in 2011 by a group of four senior nonlawyer professionals at U.K.-based law firm Olswang (now CMS), including its former COO, Kevin Munslow, Kindleworth has carved out a successful niche advising high-end law firm startups.
Fellow co-founder James Hacking, Olswang’s former head of operations, says the group’s initial intention was to offer multidisciplinary consulting to law firms. But that plan changed after a chance meeting with Graham Huntley, a senior litigation partner at Hogan Lovells. His practice had been severely impacted by conflicts thrown up by that firm’s trans-Atlantic combination in 2010, so he decided to open a firm with fellow litigation partner Helen Brannigan.
Kindleworth handled everything, from structuring the business and obtaining regulatory approval, right down to finding office space and arranging banking services.
It has proved a highly effective proposition. Word-of-mouth referrals led to roles on other successful startups, including Three Crowns, an arbitration boutique launched by three partners from Freshfields Bruckhaus Deringer, and ARC Pensions, founded by a former Mayer Brown partner and the ex-senior partner of Pinsent Masons.
“Leaving the safety net of a big, established brand is a nerve-wracking experience for partners, but the fact that we now have a track record [of successful spinoffs] really helps reassure people,” Hacking says. “Partners initially don’t really understand why they need us, as they’ve never launched a new business before. But they soon realize that even if they did have the necessary experience to do so, they’re so busy with their practice that they simply don’t have the time.”
But the real genius behind Kindleworth’s business model is that its involvement with its clients doesn’t end once the new firms open their doors: It continues to provide ongoing business support services, seconding staff who work directly from the client’s offices. While the initial spinoff work is typically handled on a fixed fee, these retainer arrangements provide a more consistent source of revenue.
Several Kindleworth partners even retain senior management positions at their clients: Hacking is COO at Three Crowns; Munslow is CEO at Signature; and partner John Skelton is the financial director at ARC.
Kindleworth is now developing a new line of business helping spinoff firms secure working and even pre-launch capital—something that has typically come out of the founding partners’ own pockets. It is also considering relationships with headhunters who would refer partners to Kindleworth, so that they can consider establishing their own business, rather then undertaking a lateral move.
As a business that feeds on disruption, Hacking sees the current uncertainty in the legal industry as an opportunity. “For us, change is a great thing,” Hacking says. “When we first started, it was quite a new thing for leading partners to set up their own businesses. Now, there’s a growing realization that there are viable alternatives to Big Law. We like to think that we are contributing to that process.”