Alternative business structures

Legal Services Board chief executive Chris Kenny has spoken out in favour of the “holy grail” of diversity neutral aptitude testing across legal careers. Addressing a legal education conference at Harvard University in America – one of the first times the LSB has seriously addressed its role in legal education – Mr Kenny also hit out at lawyers who see their ethical training as creating “a wall of professional exclusivity”.

The chairman of the Legal Services Board has called on the Solicitors Regulation Authority (SRA) to be more flexible in its approach to law firms which are looking to do deals with external investors before alternative business structures (ABSs) become a reality on 6 October 2011. In a major speech, David Edmonds also suggested that the rules which prevent solicitors having unregulated separate businesses carrying out unreserved legal work are anti-competitive.

There is real potential for alternative business structures (ABSs) to have a positive impact on both the profession and consumers, the Solicitors Regulation Authority has said. The provisional conclusions of an equality impact assessment said solicitors would benefit from improved employment opportunities, while ABSs would facilitate improved access to legal services for consumers.

Australian law firm Slater & Gordon – the first in the world to go public – is keeping a close eye on developments in England and Wales and would consider entering the market, its managing director has revealed. Andrew Grech also gave an insight into the lengthy process they went through to float.

Over half of all law firms have either lost business to a non-lawyer competitor or expect to in the future, a new survey from accountants Baker Tilly has revealed. Some 29% of firms with 25 partners or fewer had already lost business to a non-lawyer competitor, compared to 12% of larger practices.

The updated draft of the single Handbook that will govern both traditional law firms and alternative business structures from October 2011 is being unveiled today by the Solicitors Regulation Authority (SRA). This is the last opportunity to comment on it. The latest stage in the SRA’s move to outcomes-focused regulation also includes a call for the Legal Services Board to extend the definition of reserved legal activities to cover all “solicitor activities”.

In the final part of his series on external investment in law firms, Jeremy Black of Deloitte explains that private equity firms have one goal – to make money – and briefly looks at the implications of raising funds through listing.

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.

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.

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.

In the second part of his series looking at external investment in law firms, Jeremy Black of Deloitte looks at the good and not-so-good circumstances in which investment may be sought.

Jeremy Black, associate partner in Deloitte’s professional practices group, begins a week-long look at the issue of external investment in law firms by considering the forces of change that will encourage them to investigate the options available.

Solicitors should not be allowed to enter into any binding contracts for the sale of a law firm to a non-lawyer investor ahead of 6 October 2011, the board of the Solicitors Regulation Authority will be told this week. Certain conditional contracts should be off-limits too because they threaten the independence of law firms.

The Scottish Parliament yesterday approved the introduction of alternative business structures (ABSs) which are majority owned by solicitors and other regulated professionals. The Legal Services (Scotland) Bill completed its passage through Holyrood and allows external investors to hold 49% of any new legal services business.