A legal Big Bang is round the corner, but most City firms are unprepared
Do lawyers have a good profile? “Compared with estate agents and gunrunners, then yes”, replies Ian Dodds, director of BarFutures, a barristers’ chambers. But, alas, compared with more worthy professions such as doctors and teachers “probably not”. Quentin Poole, senior partner at Wragge & Co, reckons if the question was put to him a couple of years ago he would have given a shoulder-shrugging “OK” verdict for the image of corporate law firms like Wragges – and a “poor” for traditional firms which he reckoned were seen as “expensive and slow”. But now, the lawyer reckons, corporate firms have become “swept up in the tidal wave of disapproval that has hit the banks and the financial services sector”.
So here’s a challenge for the legal profession. According to new research (incorporating the above interviews), just 38 per cent of leading lawyers believe that their profession is regarded in a positive light by members of the public.
Most lawyers understand that image matters, too. With the introduction of the Legal Services Act 2007 and its promised new dawn of liberalisation and increased competition, 62 per cent believe the importance of their profile will significantly increase. “We’re talking about a £20bn legal services industry that is being forcibly opened up to external competition like never before,” says Gus Sellitto, director of the Byfield Consultancy. The question is, are lawyers prepared for what the future holds? The evidence suggests not.
The Big Bang report: Opportunities and Threats in the New Legal Services Market is published tomorrow by Byfield and the partnership law specialists Fox Williams LLP. It features in-depth interviews with over 50 leading lights in the legal services market, from the world’s biggest firms such as Clifford Chance and DLA Piper to struggling sole practitioners on the high street, as well as prospective investors in legal services and non-law businesses reported to be sizing up the legal market.
In a survey commissioned for the report, 42 per cent of respondent lawyers expressed concerned about the prospect of new big brand entrants with big marketing budgets but just 32 per cent said that they planned to increase their public relations activity as a result. “That figure suggests to me there’s a lot of complacency on the part of the majority of the legal profession,” Sellitto says. “In less than 18 months the Legal Services Act will be fully in force and we are going to see a radically different legal profession. The clock is ticking.”
The Act came into force in 2007 and earlier this year there was a first, tentative toe in the waters of liberalisation when non-lawyers were allowed to work in partnership with solicitors through “legal disciplinary practices”. Today, the Legal Services Board publishes a “starting gun” paper setting out the licensing regime for these new entities. By mid-2011, the introduction of alternative business structures is expected to, as one commentator puts it, “blow apart the established conventions” of the law. ABSs will enable the eternal ownership of law firms, allow firms to sell equity and float on a stock exchange.
PROFESSIONAL TRANSITION
The Big Bang report portrays “a profession in transition”, reckons Tina Williams, senior partner at Fox Williams. “Many firms and barristers’ sets are looking at the traditional business model and asking whether its best suited for their clients’ needs and to compete in different legal landscape.” At the same time, she reports that private equity firms are “sizing up medium sized City practices, national players and barristers sets and some firms are actively lobbying the regulators” to relax the rules on external ownership ahead of the 2011 deadline.
Waiting in the wings are retail giants such as the Co-Op, banks such as the Halifax, as well membership organisations including the consumer group Which?, insurers such as DAS, and companies like A4e. All those organisations are profiled in the report. “Competition for legal services is intensifying, as the new research shows,” Williams adds.
In an interview conducted for this report David Edmonds, the first chair of the Legal Services Board, was asked how radical might be the changes that are about to be introduced under the Legal Services Act. The former director-general of Oftel replied by saying that he had been approached “at least” three times over the last 12 months by agitated lawyers saying: “Mr Edmonds, you’re not going to change something that has over 800 years of history behind it.” He replies: “The Legal Services Act gives me a set of duties and responsibilities which might well mean me changing 800 years of history – and is the fact that there are 800 years of history necessarily a good thing?”
The Big Bang report is written by Jon Robins and available from tomorrow at www.byfieldconsultancy.com.