Legal Services Act

There will be no ‘big bang’ in legal services in the near future and if solicitors are waiting for it before deciding on their firm’s survival strategy, they risk being overtaken by events, a leading solicitor has warned. Neil Kinsella, managing partner of national law firm Russell Jones & Walker, also said that firms could be “dancing with the devil” by accepting private equity investment.

In the fourth part of his look at external investment in law firms, Jeremy Black of Deloitte looks at the various methods to value equity stakes in law firms, which is not the easiest of tasks when it comes to law firms for various reasons.

The Legal Ombudsman (LeO) will seek to determine complaints that cross over into professional negligence, it has emerged. Chief ombudsman Adam Sampson said that while its predecessor bodies, such as the Legal Complaints Service, would shy away from complaints about the quality of legal advice offered, the Legal Services Act “makes no mention of any such limitation of our powers”.

The Law Society is to enlarge the board of the Solicitors Regulation Authority so as to introduce parity between the number of solicitor and lay members in a deal struck with the Legal Services Board. It follows a similar agreement between the LSB and Bar Standards Board, whose offer to introduce parity on the road to a lay majority has been accepted.

Plans to merge the Legal Services Consumer Panel into Citizens Advice will need to overcome issues around confidentiality and conflicts of interests as the charity is also a provider in the legal market, Legal Services Board chairman David Edmonds has warned.

The Legal Services Consumer Panel could be a surprise victim of the government’s so-called bonfire of the quangos and be merged into Citizens Advice, it has emerged. The panel’s chairwoman, Dianne Hayter, has hit out at the move, saying Citizens Advice would not be able to replicate the role of the panel during a “critical period” in the development of legal regulation as the introduction of alternative business structures nears.

Regulators should consider making diversity training mandatory for senior partners and line managers in law firms, say academics after research uncovered a complex web of barriers between minorities and women, and the upper reaches of the legal profession. The findings will be backed up by a forthcoming study into pay disparity by the Law Society that has uncovered “a kind of structural inequality”.

Most law firms do not have the balance sheets or the systems to appeal to venture capitalists but those who can pull off deals may see some major benefits, it was claimed yesterday. Sara Hutton, a relationship manager at Royal Bank of Scotland, said venture capitalists would want a return of 20-30% and an exit in three to five years that is “reasonably visible” now, such as a flotation, management buy-out or trade sale.

The new Legal Ombudsman (LeO) service is set to turn away the rash of complaints about the way certain law firms have been pursuing alleged filesharers, it has emerged. However, it is instead referring them on to the Solicitors Regulation Authority.

In the third part of his look at external investment in law firms, Jeremy Black of Deloitte looks at the kind of funding for you and what lessons there are from other professional services firms.