UK Blawg Roundup #9 – Legal Services Act and Alternative Business Structures

UK Blawg Roundup #9 – Legal Services Act and Alternative Business Structures

When I initially agreed to host the 9th UK Blawg Roundup, which I’m delighted to be doing, it all seemed fairly straightforward and sufficiently in the distance to seem quite manageable timewise. I anticipated receiving a long list of blogs to review which I’d pull together in a blog post.

However, the reality has been quite different.  My book project has taken longer than initially anticipated, and it became obvious as the deadline for blog submissions approached, that none were going to be submitted!  Time was at a premium.  So, I enlisted the help of my trainee Stefano Debolini, to hunt for material to include in this Blawg review and to generally lend me a hand with this post.

Stefano sought out blogs talking about Multi-Disciplinary Practices, Alternative Business Structures, the Legal Services Act,  Tesco Law, among other subjects, and has learnt a great deal about legal business in the process.  This can only stand him in good stead for the future as it’s his generation that is going to experience the full effects of these market changes, long after us baby boomers have ceased to practice law.

At around this time I received Brian Inkster’s Christmas hat, and heard  about Michelle Hynes’s sad health news.  Michelle is a former marketer who is retraining to be a lawyer.  She is very on the ball and maintains a popular blog at legaleaglemhm.wordpress.com, where she has posted news of her tremendous ordeal and recent heart surgery.  I hope you will join me in wishing her well and a speedy recovery.  There will always be a place in the new world of legal services for people like Michelle who have had exposure to other disciplines.  They are the kind of lawyers who will be in demand in the legal industry of the future.  Lawyers able to understand technology, the internet, social media, marketing, sales, customer service, and business will thrive.

Scots

So, my attention turned to the Scots.  Scotland has its own Legal Services Act but the considerations are similar.  In his TheTimeBlawg Round up of 2011 Brian says he will write on Alternative Business Structures in 2012.  I look forward to reading this because Brian leaves no stone unturned when he focuses on a topic.  Brian  alerted me to the @HighlandLawyer blog which focuses on the law in Scotland along with coverage of ‘the use of IT, particularly but not exclusively in lawyer’s offices; or possibly even in programming; or if you are just hoping for some puns, sarcasm, or other low level intellectual humour’ – highlandlawyer.wordpress.com. IT has huge disruptive potential, as Richard Susskind has indicated, so I look forward to reading this blog for any comments on emerging technologies.

Paul McConville over in Scotland recounts parallels between the deregulation of the legal profession, and developments which led to the financial crisis in his article The Coming Bonfire – Lessons from Guy Fawkes for the Scottish Legal Profession?

While Gav Ward does not write about the Legal Services Act, he does write about Social Media.  This is a topic to watch out for if you’re trying to work out what impact the Legal Services Act might have on the legal profession.  Gav was quick to comment on the recent Law Society social media policy.  If you agree with me that social media is going to have a disruptive effect on the legal services industry (as it is already having on many other industries), then you’ll want to read Gav’s blog as it will doubtless cover developments of interest to the legal community.

2012

So here we are in the year 2012, it could be our last according to some (though not to others), but it’s definitely going to be interesting whether or not we’re here at the end of it, and if you are reading this then the subject I’ve been looking at has probably been on your mind for some time.

The Solicitors Regulation Authority has now begun to accept applications for Alternative Business Structure, some 3 months later than initially planned.  Barbara Cookson over on Solo IP blog believes it’s unlikely that many sole practitioners will be transforming themselves into ABS.  While I can see a number of benefits if my own firm Azrights became an ABS (such as the possibility of entering into joint ventures with non lawyers, which is a way in which the rest of the business community grows and expands) I would certainly not want to be an early adopter.  It’s an expensive process, and unless one has a business plan that depends on having ABS status (such as if you need angel investment) I suspect it’s possible to achieve partnership like arrangements by relying on the separate business rules, rather than becoming an ABS.

Nicola Proudlock a former in house lawyer who has set up her own practice New Leaf Law says Starting up a legal services business has required me to think and behave in ways I never have done before. I’ve been reworking my business model as I plan for growth. I know that the structural and economic model has to be radically different from traditional offerings to be truly customer-led, and to build for future success. I also know how hard it is to move away from those deeply ingrained beliefs about what legal services should look like. Beliefs that first took root 20-odd years ago in private practice. At each iterative step of my strategic development, I am having to challenge myself about such long-held assumptions and what can, actually, be achieved. Instinctively, I know what has to be done – but that doesn’t make the process of getting there any easier.

I look forward to hearing more from Nicola and seeing more writing on this topic by bloggers.  In the meantime, will wait and see how  the ABS pans out and whether it attracts smaller players.  One insightful writer I will be watching closely is @bhamiltonbruce who wrote an excellent piece on referral fees recently.  Unfortunately I could not find a link to her blog but if you follow her on Twitter you will catch sight of her posts.

Such a sweeping change in the way legal services can be offered up to the public has undeniably left the gate open for misinformation and confusion.  People far and wide have been asking what does this mean for me? How can I take advantage of the changes? Where do I sign up? Google to the rescue! The web is chock full of discussion on the subject and a quick search will throw up more information than you can shake a stick at, but finding the wood among the trees is a pain.  Luckily for us, blawgers of every discipline have stepped in to lend a hand.

Bob wasn't so keen on the firm's introduction of multiple additional disciplinary practices

For those contemplating competitive conveyancing Karen Hain offers some direction over at Bottomline Online.  For accountancy practices interested in bringing a multidisciplinary flavour to their business Freiderike Heine has some good news for you at LegalWeek.  For links to relevant practioner blawgs – few and far between at the moment, though becoming less so – I am indebted to the Hitch-Hiker’s Guide to the Legal Services Act at TroubleAhead.co.uk which I mention again below and would recommend to anyone interested enough to read this review.

Mark Smith (@Intchallenge) offered up both a retrospective and forward-looking piece at his blog IntelligentChallenge.com with links, comment and discussion on the ever changing landscape of the legal profession, suggesting that over the last two years ‘much of the innovation and drive that has been missing from so many parts of the profession for decades has suddenly been discovered and injected into its flabby buttocks’: The end of the beginning.

Like to Listen?

Before continuing, if you feel partial to kicking back, opening a bottle of Rioja and absorbing more comment on the LSA without the unpleasant left-right-left-right-left-right regimented eye movements that accompany this reading debacle, you might like to hear some of the lawcasts publicised over at charonqc.wordpress.com where he discusses the changes with Neil Rose, and Chrissie Lightfoot the Naked Lawyer among others.  In early 2011 the Rioja afficionado spoke with Jeremy Hopkins, Practice Manager, 3 Verulam Buildings.

“Of course, sets must continue to focus on the Bar’s areas of strength – high quality specialist service at highly competitive cost – and combine this with good communication to the marketplace. A very strange kind of big bang would have to happen to create a market where these fundamentals are no longer a recipe for success.” – read more

As for the effect of the changes on the Bar Jeremy Hopkins’ at Clerkingwell, projects a positive future for the Bar.  He recently wondered whether the increased buying power of a new breed of law firm will mean barristers’ clients having ‘little time for what we regard as traditionally accepted practices’: The Legal Services Act – what now for Chambers?

Tesco Law?

For firms large or small, the mythical Tesco Law has been the monster lurking in the closet ready to pounce as soon as darkness falls and the ABSs arrive.  How do traditional High Street law firms compete with these giants of business and branding?

The points made by Jon Bloor and Michael Scutt, are particularly insightful here: ‘Could it be that lawyers have been worrying too much about Tesco and not enough about Google?’, [will it be] the web that will fundamentally alter the way we practise law, not the Legal Services Act?’.  In fact Michael’s blog has a wealth of comment and information on the deregulation of legal services.  If you are struggling to find blawgs on the LSA by practitioners, as he was, TroubleAhead.co.uk is where you should start.  Another great dedicated resource and a site whose name leaves little to the imagination, run by solicitor and consultant Catherine Baker, is The New Playing Field for Legal Services.

Jon Busby (@legaltwo) casts doubt on the likelihood of Tesco Law, and poses the question: Does anyone know what Tesco Law actually means? answers on a postcard.

Louise Restell’s BlogTo infinity and beyond: Google Law prepares for blast off. says ‘whether the Law Society and the firms it represents like it or not, we are approaching the age of Google Law and nothing will ever be the same again’.

Nick Lindsay envisages ‘the likes of Jones Lang LaSalle negotiating leases [and] Adecco providing employment advice’, noting that ‘In reality, a lot of these firms already do some of this work but with caveats that lawyers should check it so the transition to providing full legal advice will be surprisingly easy’ – find out whether ABS means Death by a thousand cuts for a law firm.

The freelance journalist Polly Botsford notes the OFT hypothesis that ‘Markets generally work best for consumers when there is unrestricted competition between existing suppliers, and unrestricted potential competition from new suppliers and from new forms of supply.’, and wonders what will be the creative impact of alternative business structures on law?  Among many insghtful predictions, one that caught my eye was the potential opportunity for in-house legal teams to begin delivering legal services directly to other businesses.  If this happened, not only are firms likely to face increasing pressure internally to improve efficiency, and new rivalry from Tesco Law, but they might soon be competing with their own clients!

Further Reading from In-House Lawyers and Thought Leaders

However, reading the blogs of 4 tweeting in-house lawyers @legalbrat, @kilroyt, @in_house_lawyer and @legalbizzle I don’t get the impression  they’re likely to set up as ABSs.  Though it is clear from the thoughts they communicate in some of their blog posts, that law firms need to transform themselves, consider alternatives to hourly rate charging, and focus on delivering value.  So, the Legal Services Act doesn’t just present a threat to High Street law firms.  We’re likely to see a huge shake up in the legal market, even if this doesn’t happen straight away.  There is no room for complacency even among the Magic Circle law firms.

I am also going to keep an eye out for what thought leaders in this area @RichardMoorhead , @StephenMayson, @johnflood who offer thought provoking information and comment at Lawyer Watch, StephenMason.com  and John Flood have to say.

By contrast to these innovative thinkers, many law firms may be taking the advice of a well known accountant in one of the big accountancy practices who advises the legal profession on how to run successful practices.  Strikiingly, his advice, at least a few years ago, was that law firms should make sure they charge all the time they spend on a client’s matter.  If you’re in the shower or travelling home, or otherwise away from your desk when you think about a client’s matter, then you should make a note of the time it takes in order to charge your time.  You would be solving a problem of the clients mentally, and so should properly charge for that time.  Is the world still like that for any lawyers I wonder?

Andy's business was certainly alternative, but client meetings were often a little tense

Alternative Business Structures: Who’s Doing It?

So who can we expect to see leading the charge in the new legal landscape? Who will test the water, and how?

Many commentators are waiting with baited breath to see how firms take advantage of new opportunities to attract investment, by sharing ownership with non-lawyers.

Neil Hodge at the International Bar Association suggests that larger City firms don’t see the value in outside investment, citing Slaughter and May, Clifford Chance, Wragge & Co, and Allen & Overy as having spoken out against surrendering equity to raise capital.  Instead, in his article Top Uk law firms react to first Alternative Business Structure flotation Neil identifies mid-tier firms as those most likely to take advantage of the changes, with Everyman Legal and Irwin Mitchell having commited to a structural review by the time he went to print in October.  For a more recent list of ‘first movers’, see The Lawyer’s: 2011 Round-up – Alternative business structures: Street legal.

Legal Futures‘ article in October also delivered news of private investment into the soon-to-be-a-household-name QualitySolicitors, the vision of the business being create the “Specsavers of the legal world”. Find out more here: QualitySolicitors hits the big time as PE investor buys majority stake.

In the meantime, the Law Society Gazette recently reported that the Co-op, and Irwin Mitchell have applied to be ABSs.

Other interesting posts from the Blawgosphere

Finally, I’ve noticed the blog of the Legal Awareness Society founded by Dr Shibley Rahman discuss his difficulties in securing a training contract.  I suspect as the market opens up and new career opportunities present themselves the current plight of law students seeking training contracts will be a distant memory.  More varied careers will open up in the legal market.

Next time on the UK Blawg Circuit

I hope you’ve enjoyed this brief trawl through the blawgosphere, and that you will join the Blawg Roundup next time for the 10th instalment hosted by Charon QC at charonqc.wordpress.com.   Before tailing off I also wanted to mention past hosts of the UK Blawg Roundup in whose footsteps we tread where they have not been linked to above: Tessa Shepperson at The Solicitors Online Blog; Paul Hajek at Clutton Cox; and Victoria Moffatt.  For news of future Roundups keep your eyes on UKBlawgRoundup.co.uk.

3 thoughts on “UK Blawg Roundup #9 – Legal Services Act and Alternative Business Structures

  1. Michelle Hynes aka Legaleaglemhm

    Thankyou for your very kind words Shireen and including me in your Blawg round up. My health is at the front of my mind at present and therefore I will be out of the legal loop for several months. The Blawg round up keeps me up to speed with whats happening in the legal world . I hope to be starting practice this year as a trainee solicitor and your words are very encouraging.

    best regards
    Michelle Hynes
    @legaleaglemhm

    Reply
  2. Pingback: The UK Blawg Roundup #9 is out! via @ShireenSmith | Ward Blawg

  3. Nick Lindsay

    Shireen, a very thorough post as always and I’m honoured that you have quoted from my post ‘Death by a thousand cuts for law firms’. I thought you might be interested to know that Elemental CoSec (who’s blog that post was on) is not an ABS but is providing advice on non-reserved legal matters.

    For corporate and commercial legal advice for businesses there is no need to be registered with the SRA as the definition of reserved legal activities is actually surprisingly narrow. With all the comment and speculation around ABS’s it is interesting to note that for a lot of ‘legal activities’ they are not actually necessary.

    Reply

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