Q&A: Stanislav Roth – “I want to maximise our people’s potential and let them fly to the full extent they can in every sense.”

[Australasian Law Management Journal,Finance & Accounting,General Management,Marketing & Business Development,People Management(HR),Strategy & Leadership] January 16, 2018

In this Q&A, Source Legal founder and managing director Stanislav Roth discusses the big break he received through immigrating to Australia in his teens; the satisfaction he gets from running his own law firm; and why retainers and an agreed price model are the secrets to his success.

You now run a successful law firm, but your early study and business life must have been challenging as an immigrant. How did you end up in Australia?

“I came to Australia in 1992 from Ukraine soon after the collapse of the Soviet Union. I was 19. So I had finished school in Ukraine and even did a couple of years of university there studying chemical engineering, not law.”

That represents a major life change. How did you cope?

“It’s a difficult age at which to immigrate. Nineteen is the beginning of your adult life, so I had to start afresh. But I wanted to immigrate and be in Australia and learn English and build my life here. So I’ve embraced it and it’s a fantastic place to live and have a business, so I’m very happy to be here.”

After studying law and science at Sydney University, you went on to practise law as an in-house counsel at major companies such as Alstom, Areva and Lend Lease before setting up Source Legal, which offers an ‘outsourced in-house model’ to small and medium enterprises, in 2011. What inspired you to establish your own firm?

“The genesis of the model really comes from my experience and skillset as an in-house lawyer. I was working as a regional general counsel of a large company and my job was really to build and run an effective legal department. I realised that a good legal department can add a lot of value to the business and really become a true partner to the business. I also realised that the vast majority of businesses do not have access to such services because of their size. They are between a rock and a hard place because they can’t do much in terms of legal support. They only really use lawyers when it’s unavoidable, or sometimes they over-use lawyers and find themselves spending a lot of money unnecessarily. So what I decided to do was replicate a well-run legal department, but to make it available for many small and medium-sized companies.”

Source Legal recently won the prestigious 2017 Business of the Year title as part of the Optus My Business Awards. As the first law firm to receive the honour, you must be rapt.

“It was pretty unexpected. We knew we had a chance to win our category, but we had no expectation of winning the Business of the Year award. That was really amazing. To see a business like ours – challenging the status quo in a conservative industry – recognised on the national stage was absolutely a career highlight for me.”

The judges commented that your firm differentiated itself by offering unlimited commercial legal support to SMEs. How is your model different?

“What is appealing about our model is that it is really simple and effective. We’re not one of those NewLaw firms that are unclear about what they do and how they do it. Source Legal acts as a de facto in-house legal team for our clients.  Our model is really just designed to bridge the gap between the legal services that businesses actually need and what traditional lawyers provide.

Our approach to legal services is akin to what good in-house lawyers do – which is being fast, responsive, practical, decisive and simple in the way we communicate and solve problems. That’s what we do.”

You have received publicity for innovations such as offering free one-page contracts for clients through 1pagecontracts.com.au and minimising legalese. Do you see yourself as a disruptor?

“I started out with that mindset. What drove me was the observation that there is a disconnect between what law firms do and have done for hundreds of years and what businesses actually need. I guess you could call it disruption in that we are trying to fill a gap in the industry. However, the services we provide are fairly traditional – normal legal support from contract reviews, drafting and negotiations through to advice on employment law and consumer law and so forth. So there’s nothing too high-tech about what we do. What we really provide is experience and an ability to solve problems and get things across the line quickly – and I haven’t really yet found any technological solutions that help us do that.”

So it’s about people skills and legal knowledge. Is that right?

“Yes, there’s really no magic. It’s about the way we interact with clients. We have some very simple rules and everyone in our firm complies with them. For example, we aim to respond to everything on the day we get a request from a client. If we can solve it on the day we do that; if not, we tell the client when we will get to it. That sort of speed is a huge hallmark of our success – resolving things simply; giving straightforward advice; summarising things in a few bullet points; and not sitting on the fence. That’s how we operate. It’s about experience, knowledge and putting clients first.”

How big is the firm now?

“We have 12 lawyers on the team providing quite a comprehensive spectrum of legal services and we’ve got many clients, most of whom are on retainers.”

We understand that fixed fees are crucial to your success. Can you explain why?

“Hourly rates simply don’t exist in Source Legal and never have. We work on an agreed price basis, and I prefer that term to ‘fixed price’ because that’s what it really is. For any task, as well as for retainers, we agree on a price with the client upfront. When proposing a price, we primarily look at who the client is and the job at hand and try to assess what the particular job is worth for the particular client. You can call it value-based pricing, but it’s no different really from how most businesses operate in selling their products and services – and when I say most business I exclude most law firms and professional services firms. Usually what we propose is spot on because when you place yourself in your clients’ shoes, and when you exercise that analysis, you are likely to get pricing right. Occasionally, we engage with a client and adjust the price or propose a few alternative options, but it’s extremely rare that we don’t agree on the price. I can count on the fingers of one hand the times when we couldn’t agree on the price.”

Where do retainers fit in?

“They are an important part of the overall model. If we want to talk about innovation, our retainers are probably our most significant innovation – not that it’s particularly mind-boggling, but I don’t think anyone does retainers the way we do. With Source Legal retainers, we agree on a monthly fee with clients and then provide unlimited legal support. The only exceptions are things like handling a major restructuring or mergers and acquisitions. But normal day-to-day legal support is completely unlimited in terms of time or tasks. That model is truly unique because other firms might do retainers, but from what I see most of those retainers are still couched in terms of the number of hours or tasks performed, whereas we really become a truly outsourced in-house legal function for that business and operate as though we are their legal department.”

What is the client reaction?

“They love the retainer model and usually once they’ve experienced it they appreciate the value and convenience it delivers. And we love it, too, because it enables us to be a true business partner with our clients and to be really integrated with their business.”

As the founder of the business, what management philosophies do you bring to the table?

“There are some key principles that underline our model. I enforce them strictly, although with a light touch. Those principles, for example, are around being hyper responsive, being very fast, being practical, never being ambiguous and always agreeing on a price upfront. I ensure that everyone who works at the firm adheres to these principles. That’s not difficult because people who work for us want to provide services in that way. The other thing is that I want to maximise our people’s potential and let them fly to the full extent they can in every sense. There’s never any looking over their shoulders; it’s about letting them be themselves and sharing their experiences. And if they want to be more actively involved in business development or operational matters and so forth, I support them.”

In hindsight, are you happy you set up your own business, despite the inevitable challenges of doing so?

“I am very satisfied from a personal point of view. In a sense it sparked my interest again in being a lawyer – going out on my own and building something I believe in and something that brings a lot of satisfaction because of the response and loyalty that we get from our clients. We have an incredibly loyal client base who are truly thrilled by the way we support them and that’s what makes it all worth it for me.”

What does the future hold for Source Legal?

“We haven’t scratched the surface yet. While we have loyal clients, we are still not very well known in the market. And that’s the beauty of the Optus MyBusiness Business of the Year award – it means hundreds and possibly thousands of businesses will find out that we exist and that we are providing the type of service that we think most businesses need. How we will grow? I’m not sure yet. It could be organic growth, or there may be opportunities to partner with others or to seek external investment. We are looking at all options, but we are certainly very growth focused.”

www.sourcelegal.com.au