ABS “perfect storm” lands
Date: 20 October 2011
Issue: Vol 161, Issue 7485
Categories: News
The new era of “Tesco law”, or alternative business structures (ABSs), launched this month—in spirit at least.
In reality, law firms will not be able to form ABSs until at least the new year since the Solicitors Regulation Authority (SRA) application to license ABSs has been delayed. Currently, the Council for Licensed Conveyancers is the only regulatory authority in a position to authorise a licence.
David Greene, senior partner at Edwin Coe and NLJ consultant editor, says: “In terms of our practices, the question on many solicitors’ lips is whether they should be looking at establishing an ABS and attracting outside investment.”
City firms “would probably say that they have sufficient capital to run their businesses and expand,” he said, while mid-tier firms may find that their business model is “often difficult to squeeze into the box that secures investment.”
He adds: “The place where external investment looks more likely is in the ever-growing commoditised litigation services.”
Law firm Everyman Legal said last week that it will apply to become an ABS early next year and seek a stock market admission on Sharemark in the final quarter of 2012.
The firm, which is four years old, combines a national network of “partner” solicitors with the sale of online templates and information. It specialises in providing legal services to entrepreneurs.
Meanwhile, law firms have been warned of a “perfect storm” whose effect will be “huge”, by investment bank Espirito Santo.
Its report, The Legal Services Market: The Race is On, published this week, predicts the launch of ABSs will cause a “seismic re-appraisal” of law firm partnerships as they face the “full forces of the market”.
Smaller and mid-market firms must specialise or consolidate, the bank advises.
Professor Stephen Mayson, in his foreword to the report, wrote: “The certainties to which law firms have been used have gone…The relentless pursuit of chargeable time and profits per partner will be confined to the dustbin of history.”
Share this page
