The English arm of international law firm Reed Smith has become an alternative business structure (ABS) as it looks to “future proof” its practice by offering non-legal services and hiring non-lawyer partners.
The firm has ruled out using the status to seek external capital or a public listing.
Reed Smith LLP is the combination of the US firm of that name and City firm Richards Butler, which it bought in 2007. The LLP also covers the Abu Dhabi, Athens, Dubai and Paris offices. In 2018, it recorded a profit of £73m on a turnover of £195m.
Cahill Gordon & Reindel, based in New York, became the first US firm to set up an ABS in 2015.
Tamara Box, Reed Smith’s managing partner for Europe and the Middle East, claimed it was the “first international law firm to convert to an ABS”.
She explained: “We are future-proofing our business and now have the agility to immediately seize new opportunities – in tech, big data and other specialised consultancy services – that will help us drive our clients’ businesses forward.
“Our clients’ needs have changed. In this era of digital transformation, they are looking for a strategic service provider that can go beyond just providing advice on the black letter law but rather one that can assist in solving any challenge they face to help them achieve their business goals.
“Whether that solution comes from individuals with a legal background or not is irrelevant. We are currently a firm of 3,000 people, and we recognise that the fruits of our labour come from our entire global workforce…
“The ABS conversion allows us to attract and incentivise the right talent for future growth, and opens the door to the possibility of offering ownership within our business to all types of talent going forward.”
Non-lawyer ownership of law firms is banned in the US except in Washington, DC, but we have reported in recent months that California, Utah and Arizona are three states moving to allow it too.
Andrew Jenkinson, Reed Smith’s London office managing partner, said: “As some states in the US look to replicate the possibilities provided by the ABS model, we are excited to be at the vanguard among international firms in this wave of legal sector innovation.
“Our clients are increasingly asking us to help them future-proof their businesses and plan for the next five to 10 years.
“It’s our responsibility to do the same for our own business, ensuring we are sufficiently nimble to respond to commercial initiatives as they arise and staffed with the best talent to unlock future solutions and products.”
Reed Smith said the ABS conversion would have no impact on the existing corporate structure of the firm; Reed Smith remains an LLP, although its membership now includes a corporate vehicle.
It applies to the firm’s LLP, incorporating partners in the UK, France, Greece and China. The firm’s single partnership and single global profit pool will remain unaffected.