The number of employers using employment law consultants is continuing to rise, but are their services as good as a law firm? Kirstie Redford reports.
I n the past few years, hoards of employers have been signing up to use the services of employment law consultants. Although they have been around since the early 1980s, growing legislation and tighter budgets have made consultants seem increasingly attractive to many organisations. And the promise of accessible employment law advice – usually via the telephone – at a fraction of the cost of a solicitor is tempting. But do these services really provide the same value as a law firm?
Lee Jeffcot, solicitor at law firm Berg Legal, thinks not, and says consultants fail to give a bespoke service.
“Most consultancies offer a legal helpline and review HR documents and policies for a fixed fee. But this is quite a basic service and offers what I would call ‘textbook advice’,” he says. “Law firms focus on providing a high-quality personalised service. If clients had a serious issue, such as a tribunal, they would probably still have to seek advice from a law firm.”
HR consultancy Marshall James has a dedicated employment law department, but its managing director, Andy Cook, says the consultant’s job really begins where the lawyer’s advice ends – it’s all about implementation. Consultants advise HR about how to stay compliant with policies and procedures, such as staff transfers under TUPE (the Transfer of Undertakings (Protection of Employment) Regulations), grievances and disciplinaries, he says.
“If an employer wants advice on, say, union recognition, we could give advice on the practical application of it, rather than whether they should have it,” says Cook.
The employment law department at Marshall James is run by four former HR directors.
“It would be rare to find an employment lawyer who has actually worked in an HR role. A lot of my advice is from my past experiences working in HR, so it has a lot to do with gut feeling,” he says.
Mike Huss is a senior consultant at Peninsula, which claims to be the UK’s largest employment law consultancy. He says consultancies have seen growth because lawyers often lack this practical HR knowledge.
“Employers need a mix of advice,” he says. “Just specialising in law is not enough.”
The breadth of services provided by consultants can also be beneficial. “We often write the HR documents, give advice on them and, if something goes wrong, we know the policy inside out, so we can deal with it effectively. This joined-up service really works,” says Huss.
However, according to Judith Watson, head of employment and pensions at Cobbetts Solicitors, the “phone-line culture” of consultancies can rile clients.
“There is no continuity of services – you get a different person each time you phone for advice. The quality at tribunals is also questionable as they often struggle to cope with unusual situations. We recently had a client who had been advised by a consultant that they couldn’t make a disabled employee redundant, which is rubbish,” she says.
Call for industry regulation
Legal professionals are concerned that consultants don’t need any legal qualifications to give advice. Jeffcot says: “Some lawyers believe consultants who give legal advice should be regulated. At the moment, you don’t need a single qualification.”
However, from a consultant perspective, Huss says the sector is succeeding without regulation and at no detriment to clients. “I don’t remember any major headlines where a rogue has set up a consultancy,” he says.
One of the big pulls for using a consultancy is the provision of insurance to cover clients against costs if things go belly-up and they end up at a tribunal.
“Clients like the reassurance that if they face a tribunal they won’t have to pay out, even if they lose. With a solicitor, you pay out for advice and if it doesn’t win you the tribunal, you also have to pick up the tab,” says Huss.
But Watson says she has had negative feedback from clients who have taken out such cover via consultants. “Insurers don’t like to pay out, and it is not until you come to claim that you realise how crucial the small print is. We have not found an insurance product so far that we would be happy to recommend – many don’t cover discrimination claims,” she says.
The price is right
With budgets tight in many HR departments, the market for consultants looks set to remain strong if the price differential remains.
Peninsula offers services for a fixed fee, which is based on a percentage of payroll, says Huss.
“We are much cheaper than a solicitor – for a firm of eight people, we could write contracts, provide advice services and tribunal insurance for about 1,500 a year – the same services would cost around 3,000 to 5,000 with a solicitor,” he says.
However, Watson says that using a law firm can actually lead to cost savings.
“We develop a relationship with the client to help achieve their business objectives, minimise risks and spot trends to cut internal costs. Law firms are solution-driven, rather than process-driven,” she says.
If HR budgets allow, there is scope to use both solicitors and consultants, according to Joanne Dean, director of personnel and legal services at Barking College, who is doing just that.
“We subscribe to a legal helpline, staffed by legal executives. But we only use this for minor queries – you get what you pay for. If we have a major issue, we will always use a lawyer,” she says.
Cook admits that his consultancy has worked with law firms in the past. “I don’t claim to be an employment law expert. If a case got serious, we’d recommend that a lawyer signed it off,” he says.
Dean believes that paying out for a professional law firm can save costs further down the line. “I’ve been here since 1987 and we have never been to tribunal, so I feel the legal advice is money well spent. Some in HR may prefer a more gung-ho approach, but I like to get the right advice up-front to reap benefits in the long term,” she says.
Some law firms are now also getting wise to the competition, and are adding consultancy services to their offerings.
Rebecca Thornley-Gibson, head of employment at law firm ASB Law, says: “Increasingly, law firms are seeking to maximise their share of the market by introducing additional services such as telephone support advice and HR consultancy.”
She adds that there are some firms, which do not have a dedicated in-house HR function, that are often more suited to a consultancy to provide ad hoc practical support.
However, there is room in the market for both services. As law firms and consultants chase the HR pound, increased competition should mean greater choice, better services and lower costs all round.
Lawyers v consultants: pros and cons
- Fully qualified legal advice, regulated by the Law Society
- Personal service
- Top representation at tribunals
- High fees
- Fewer add-on services
- No tribunal insurance
Employment law consultant
- Fixed fee
- Breadth of HR advice
- Tribunal insurance
- Unregulated advice
- Less personal service
- Textbook’ advice