With a strong brand and considerable resources, Co-Operative legal services is already presenting a genuine challenge to the high street. Jonathan Rayner finds out why

Is this the basilisk face of things to come, the much-feared Tesco Law made flesh? Just six months into its first year, and Co-Operative Legal Services already has a team of 62 staff, all computer networked and busy in smart and airy premises in Bristol. There is ample room for expansion, too, the rows of unoccupied desks, empty chairs and silent telephones giving notice that the practice is ready to grow and grow.

Managing director Eddie Ryan says the Co-Op is a taste of the future, a forerunner to the brave new world of alternative business structures (ABSs) contained in the Legal Services Bill, towards which the profession is evolving. But will the Co-Op also sound the death knell for high street firms, which, starved of clients, are going to see revenues shrink and bankruptcy beckon?

Mr Ryan, who joined the Co-Op in April 2005 after resigning as managing director of RAC Legal Services, dismisses this apocalyptic vision. ‘There’s lots of work out there for everyone. The market is constantly regenerating itself as people move house and make other life-changing decisions. We’re simply offering solicitors an alternative career path and consumers a new and different way of accessing legal services.’

But then Mr Ryan, who confesses to being ‘a great fan of Sir David Clementi’, has long maintained that the profession is in dire need of a makeover. He says some practitioners still act as though they have an exclusive right to deliver legal services simply because they are solicitors, and clients can take it or leave it. ‘But consumers have changed. They’re now saying, “I’m paying these guys’ wages and they must do what I want”. Customer focus is all-important and is the cornerstone to everything we do here.’

Bob Labadie, the Co-Op’s director of legal practice and a former partner at Blake Lapthorn Tarlo Lyons, agrees. ‘The Co-Op isn’t the end of the world [for high street firms] – but it is a spur to change. Private practices must wake up to the fact that they’ve reached a crossroads and need to adapt. The worst-performing practices, the ones that fail to put the consumer first and last, will go to the wall – and deserve to do so.’

So if Co-Op Legal Services is part of the inexorable march of history, just how far has it marched to date? It was launched in mid-August 2006 to offer legal help to The Co-Operative’s 3.7 million members and, with brand loyalty and recognition built up over many years, was able to hit the ground running with a well-established client base. Mr Ryan says: ‘Private law firms don’t have the same advantage. There are some very good firms out there who don’t deserve the bad press they get, but how do consumers find them?’

Since its launch, Co-Op Legal Services has been offering help with conveyancing, employment, and wills and probate, as well as legal-expenses work associated with its two million motor and household insurance policyholders. Once the Legal Services Bill is passed, and the ABS licensing system established – although when this will be cannot yet be predicted – it will be free to market these services to non-members as well.

Work has already begun on expanding the team to meet demand and spearhead the anticipated drive for new business. Mr Labadie is advertising to recruit solicitors from private practice to head up and build the various departments and is attracting quite senior figures. He says: ‘The Co-Op is not part of a de-lawyering process. The service we aim to provide is centred around solicitors and giving help where it’s needed. In return, solicitors get all the personal benefits of working in a large organisation, combined with the IT and other professional support needed to develop and retain one’s practice.’

In addition to in-house legal professionals, the Co-Op has appointed a panel of seven law firms nationwide to help cope with fluctuations in demand and avoid conflicts of interest. Mr Labadie adds: ‘The main board has also appointed Rodger Pannone [a former Law Society President and former senior partner of Manchester firm Pannone] as a non-executive director to oversee the quality of our work and monitor risk. His role is to challenge me, something he does on a regular basis.’

Clearly, then, the Co-Op is no fly-by-night operation. There are plans to sponsor promising graduates through the legal practice course and to offer them training contracts, either in-house or with panel firms. Mr Ryan describes it as ‘our investment in our future’. Mr Labadie adds: ‘It’s the ethos of the Co-Op – helping staff with their careers and by putting more in, getting more out.’

All of this sounds exemplary. The Co-Op, however, is a commercial organisation with an obligation to make a profit. How does it answer the accusation that the legal process would necessarily be subservient to commercial interests?

Mr Ryan sees no conflict here. He says that there is always pressure to trade profitably, whether you are an ABS or in traditional private practice. ‘Everyone, from sole practitioners to City firms to the Co-Op, has to pay the rent and electricity bills, and put bread on the table at home. But ethics are paramount wherever a solicitor is practising, and that applies equally to our own solicitors.

‘The Co-Op’s main board has formally adopted a resolution never to interfere with a case in progress nor apply any pressure that might compromise the sacrosanct relationship between solicitors and their clients.’

There is that word ‘clients’ again. Both Mr Ryan and Mr Labadie admit to being obsessed with delivering excellent client service – and being seen to do so. Too often, they say, lawyers in private practice talk a language their clients cannot understand, do work behind the scenes that their clients do not see and then bill them an apparently outrageous sum for ill-defined services rendered.

Mr Labadie says it is small wonder that consumers are nervous of consulting a solicitor. ‘This is why we have given a lot of thought to transparency, so that clients understand what we’ve done and why, and can then make an informed decision about how to proceed. Our IT system gives the client secure access to what’s going on with his or her case at any time of the day or night. We aim to be the most technologically advanced legal practice in the marketplace – and because we’re starting anew, we have the potential to be so.’

Mr Ryan points out that legal services are a necessary or distress purchase, not a discretionary one. ‘It’s a passion of ours to provide a service to people who need help, but have nobody to turn to. There will always be unhappy clients, but it’s how well you deal with their concerns that makes the difference. And the response on our client feedback forms, so far, has been uniformly encouraging.’

Exemplary, again. So are solicitors right to have been so cynical about ABSs? After all, the Co-Op has qualified solicitors, trainees, legal executives and paralegals, plus a commitment to professional ethics – just like a traditional law firm, in fact.

But the Co-Op is not a traditional firm, Mr Ryan explains. The big difference lies in ownership and management. The Co-Op is owned by a big commercial company, although hardly one that symbolises the unacceptable face of capitalism; the parent company has a reputation for ethical banking and for sharing dividends with its members (the membership fee is just £1). And unlike the average law firm, it has considerable resources to invest in people, facilities and technology.

The second major distinction is that Co-Op Legal Services is run by professional managers, which could be a potential advantage compared with management practices in law firms. Mr Ryan says: ‘Law firms are managed by solicitors who have climbed the partnership ladder until they are deemed sufficiently senior to be taken away from what they are best at – providing a legal service – and given responsibility for steering the firm. It’s not an approach to management recommended on any MBA course that I’ve heard of.’

Unlike partners, he adds, the Co-Op’s professional managers can afford to take the long-term view – they are doing a job, not building up an equity stake. They are sowing the seeds for a future that will bear fruit long after they have moved on.

Friend or foe, the jury will be out on ABSs for a good while yet. Some solicitors have already committed themselves to a career in the seductive embrace of what some consider to be the enemy, while others are modifying and improving the way their private firms provide legal services to an increasingly demanding public. And still others are putting their faith in the status quo, doing it the way they have always done.

Mr Ryan says: ‘The market is changing. It always does, and the supplier who comes at it from the direction of what the consumer needs will emerge the winner. The others will go the way of the dinosaurs.’