RedLaw speaks with Constantine Law about the firm’s vision and discusses the challenges ahead for the employment law sector including the ‘gig’ economy and Gender Pay Gap Reporting.
1.John and Chris, you’ve both come out of large national firms; can you tell us what your vision is for Constantine Law and what sets you apart from others?
Our vision is to build a high-end employment and business immigration law firm, which provides responsive workplace solutions to mid-market corporates.
What sets us apart is our business model, which allows our lawyers the freedom to work in a truly agile way and this has a double benefit: (a) it means that we significantly reduce our overheads (by relying on smart IT) and so we pass on the cost savings to the clients; and (b) : this means they our lawyers are more responsive to client demands.
Traditional law firms pay structures confer remuneration on a third-third-third basis: you earn a third of what you bill; one third is overhead; one third is profit to the partnership. Our overheads are less than 10% of turnover. In many larger law firms, the senior equity partners are the biggest drag on firm profitability. Further, paths to equity are often “opaque.”
We have eliminated unnecessary costs so that more pay is returned to the people generating most of the fees for the firm: the non-equity partner fee-earners. We do this by working to a lean business model that has the following key features:
- we have virtually zero non-productive overhead (so no over-sized support functions and no non-income generating partners)
- we don’t carry fixed office costs (we take high-end office space as and when we need it in London’s smartest new business club)
- all our key support functions (IT, PA/Admin, PR, Marketing) are outsourced to specialists whose job it is to provide a premium, cost-focussed service
- we use cloud-based systems so that we can work remotely, and on a scaleable and secure IT platform.
2. Constantine works across a wide range of sectors within employment law. What areas saw the greatest growth / challenges / or advancements over the last 1/ 2 years. And what do you foresee for the next year; will this continue or change?
The biggest employment law issue of recent times is the growth of the ‘gig economy’. The gig economy is characterised by companies engaging staff on a self-employed basis, usually through short-term contracts, as opposed to permanent jobs.
More and more people want to work in this way (lawyers included) as it gives flexibility and can be highly lucrative. It has also become easier for people to do so due to technological advancements; just look at the rapid growth of companies like Uber and Deliveroo.
The courts however are seeing more litigation from self-employed contractors challenging their status and claiming (usually successfully) to be ‘workers’, who benefit from certain employment rights that the self-employed do not.
Due to increased public scrutiny, the government is undertaking a review of the rights of workers in the gig economy. This is likely to result in some significant changes to employment law in the next 12 months, and a sharper distinction being drawn between what it means to be self-employed, a ‘worker’, or an employee.
3. Have these changes impacted the direction of Constantine Law in any way? Has the business needed to evolve to meet the needs of the landscape and/or the needs of your clients?
Absolutely, we see ourselves as a gig economy law firm in many respects, and that this way of working has enabled us to provide a better, more cost-effective service to our clients.
We have recently seen ‘big law’ falling over itself to use IT more productively so as to free up office space and allow its fee earners more “flexibility”. This all sounds progressive. But when you look at who benefits, it is not the clients, or the fee earners. Big law sees “agile” as a means of driving up profit per equity partner rather than driving down costs to clients.
Our model gives fees earners the flexibility to work in a way which they find the most productive and sustainable, as well as manage everything else that life throws at them. The beneficiaries of this are the client and the fee earner.
4. The employment law sector is set to see some big changes this year; Brexit and Gender Pay Gap Reporting, for example. What are your predictions on how they will affect law firms as employers, and also how will these developments change the working norms expected of the legal profession.
We think Brexit (whilst we wouldn’t have voted for it) will create opportunities for firms to support their clients through the uncertain times ahead. Brexit will not, however, significantly alter employment law in the short term, as the government intends to maintain the existing employment law protections in the UK.
The main impact of Brexit on employment law will actually be in relation to business immigration. At present, we have an economy which has a heavy reliance on EU labour, particularly in certain sectors. The government intends to negotiate with the EU to preserve the rights of UK citizens living in the EU, in return for granting rights to EU citizens currently living in the UK. Whether agreement can be achieved independently of a wider trade deal, however, remains to be seen. After we Brexit, it is also likely to be much harder to bring EU migrants into the UK, and this will widen the UK skills gap.
All of this will have a significant impact on law firms operating across the EU or with significant proportions of EU workers. Firms should be taking steps now to audit their workforce, support EU workers to formalise their status in the UK and assess whether it may be necessary to relocate staff to their EU operations.
As you say, the other big issue facing law firms is Gender Pay Gap Reporting. The legal sector has a high gender pay gap, which widens significantly from age 40 and above. The obligation on firms with 250 or more staff to publish their gender pay and bonus gap, will really shine a spotlight on the issue. A wide gender pay gap is likely to impair their ability to recruit the best candidates, will lower their reputation with clients and expose them to a greater risk of litigation. We are working with clients now to help them understand their obligations and, crucially, to identify and address any issues now, before the formal reporting obligation applies from 5 April 2017.