Linklaters & Alliance has announced the first chief executive of its online division Blue Flag, as the magic circle firm struggles to bring its long- awaited float to market.
Patrick Hynes, formerly an executive with BuildOnline, a company set up last year to provide software to the construction industry, has been named as Blue Flag’s first chief executive with a mandate to complete the restructuring of Blue Flag as an arms-length subsidiary of the law firm.
Despite Linklaters’ stated aim of “hiving off” Blue Flag as a separately branded arm last year, the firm has yet to finalise details of how the division will be restructured, though November 2001 has been pencilled in as a likely date to relaunch the service.
Blue Flag, which was one of the first attempts to commoditise legal services on the internet, was set up in 1996 and was designed to produce documentation for transactional work. It can also be used in a limited number of areas such as derivatives, employment and pensions work as a provider of legal advice.
The fate of Blue Flag is being watched eagerly by rival firms, most of which have concentrated on offering document management systems and online research services to clients instead of providing core legal services on the internet.
The cost of maintaining the database needed to back up complex computerised legal advice, together with the uncharted liabilities of offering advice online has made law firms struggle to find a way to make such services profitable.
Linklaters claims Blue Flag is making money although no figures have ever been released.
One partner told Legal Week: “It is the most profitable business by profits per partner but that is because there are only a few partners in the business.”
Linklaters partner Paul Nelson, who was responsible for developing the system, said it was a question of “wait and see” as to when the Blue Flag would be split off.
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