Profit on the margins

You don’t have to be a big firm to innovate and thrive in a downturn, as our look at the lower half of the UK 200 shows.

Keystone Law

In 2002 when the likes of broadband were still a lofty ideal, James Knight pioneered the idea of a platform law firm, something that would have been completely unthinkable in the pre-internet era.

“Everything was dotcom then – it was all about technology and instead of building a firm with bricks and mortar we came up with the dotcom idea,” says Knight.

Such has been the success of Keystone’s model that it posted a turn­over of £11.2m in 2011/12, a 5 per cent increase on the previous year’s revenue. Not bad going for a law firm that has spent just a decade in the market.

However, even Knight could not have anticipated how much technology has developed and helped keep the firm at the top of its game.

“Tools such as PLC and LexisNexis that have replaced law firm libraries have really played court to a firm like Keystone and helped us rise,” he stresses.

While Keystone’s core practice areas are non-contentious corporate and commercial advice in the TMT sector, the firm has also worked hard to make the most of technology and used tools such as document assembly to improve its profitability and cut costs. Other moves, such as the decision to outsource reception facilities to Moneypenny have also made remote working “much more realistic”, according to Knight.

Although the firm’s platform model allows its 118 consultant solicitors to work flexibly from home, like most conventional law firms Keystone does have a central office and this inevitably incurs some costs. The firm has its headquarters in London, where the firm’s two partners, Knight and corporate partner and COO William Robins, are based, and two satellite offices in Bristol and Manchester which offer some minor facilities for lawyers based locally. The London office, on the other hand, houses 15 permanent members of staff and related facilities, including a handful of meeting rooms that can accommodate up to 18 people each. Altogether, this brings the total running cost of the London office to more than £2.5m.

In spite of sceptics’ concerns that technology and social networking may be replacing personal interaction, Knight stresses that Keystone’s model has relationships at its core.

“The reality is that we’re not just a bunch of sole practitioners: we’ve used collaborative working technology to work far more efficiently and in a more joined-up way, which in turn works much better for our clients,” adds Knight. “One of the best things is that there are no politics. It’s just a flat structure where everyone has the same title, the same position and gets the same deal – everyone is on the same performance-related remuneration structure.”

A slew of hires in January confirmed Keystone’s pulling power to attract experienced lawyers from the top 50 firms to join its ranks. The 10 hires included criminal lawyer Lucinda Russell-Jones from DLA Piper, commercial contracts partner Nicholas Tall from Speechly Bircham, pensions and employment lawyer Simon Owens from Ashurst, head of private client at Hanne & Co Solicitors Nia Jones and former Motorola Mobility senior commercial counsel Clare Lucas.

For Knight, the reason lawyers are flocking to Keystone is clear.

“Keystone provides senior solicitors with the dichotomy they’re looking for,” he says. “In our world we’re not competing with the likes of Linklaters or Lovells but we are competing with medium-sized conventional law firms doing high-end work.”

And he seems unfazed by the prospect of other firms riding in on Keystone’s coat-tails.

“For the first five years nobody copied our model but now you hear about new law firms promising to revolutionise the legal profession – I think it would be a bit strange if, after 10 years, Keystone was the only one,” he says “We belong to a new genre of legal firms and being first does lend us a certain credibility. Heaps of firms are now trying to get into the same space and there’s nothing better than being seen as the forerunner.”