Survey: commercial firms eyeing up ABS opportunities, including MDPs and external cash


Williams: ABSs acting as a catalyst for change

Creating a multi-disciplinary practice (MDP), spinning off new services and accessing external investment to finance growth are the main goals of commercial law firms considering converting to alternative business structures (ABSs), a new survey has found.

Four in ten firms have already responded to the new environment, it said, changing their management strategy as a result.

The report by legal research company Jures, commissioned by City partnership law specialists Fox Williams, also found that a similar number of the 100 commercial firms surveyed – which ranged from those in the top 50 to others with turnovers of less than £5m – have either changed or are thinking about changing their partnership structure, mainly to bring in non-solicitors.

Half of all respondents said they were aware of their competitors considering, or actually applying for, ABS conversion.

Forming different types of one-stop shops – whether with accountants, insurers, claims companies or other professionals – was the model those firms considering becoming an ABS were most likely to adopt.

There was also significant interest in spinning off new legal or non-legal services through an ABS, accessing external investment to fund growth – whether through private equity or a public listing – and in forming a membership organisation with other firms to share common services as a part of a network. Nearly a third of those surveyed (29%) ruled out becoming an ABS.

Nonetheless, respondents cited the prospect of modernising their firm’s management and business process as the most compelling reason for an ABS conversion (61%). A third thought ownership by a recognised brand a compelling reason.

Asked about the financial considerations of an ABS conversion, 77% identified access to finance that is not available from partners or traditional bank borrowing as either ‘important’ or ‘very important’; 72% said incentivising partner and staff performance and 68% cited improving the firm’s cash flow.

Nearly two-thirds of respondents considered loss of control as the biggest barrier (62%), followed by resistance from partners (51%) and management time commitment (42%).

Fox Williams senior partner Tina Williams said: “The possibility of using the ABS model as an opportunity to refinance firms to enable growth or better to facilitate survival in a newly competitive environment is clear to see from our research.

“And it is clear that the introduction of ABSs is acting as a catalyst for change in the profession as many of the new legal businesses, like the network and franchise operations, could have been put in place before the Legal Services Act.

Almost half of all respondents (49%) said they were ‘not confident’ in the Solicitors Regulation Authority’s ability to manage successfully the ABS application process.

The full report can be found here.

 

Tags:




Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Blog


A new route to practice rights for chartered legal executives

Following approval from the Legal Services Board in May 2022, CILEx Regulation has launched an alternative route for chartered legal executives to obtain independent practice rights.


NFTs, the courts and the role of injunctions

In May, news broke that a non-fungible token was the subject of a successful injunction made by the Singapore High Court. The NFT in question is part of the very valuable Bored Ape Yacht Club series.


Matthew Pascall

Low-value commercial cases – an achievable challenge for ATE insurers

There are many good claims brought for damages that are likely to be significantly less than twice the cost of bringing the claim. These cases present a real challenge for insurers.


Loading animation