Market monitor

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.

Accountants should promote and extend their ability to give clients legal advice, and also have the right to conduct litigation and advocacy, the Institute of Chartered Accountants in England and Wales has said.

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.

Chartered accountants are set to compete with lawyers for probate work after the Institute of Chartered Accountants in England and Wales (ICAEW) signalled its intention to apply for the right to undertake reserved probate work. An ICAEW survey of 2,500 small practices found that around a quarter were interested in offering the service.

The body representing senior council lawyers has called on local authority legal departments to make “a step change” in the way they work as they face up to the so-called age of austerity and the opportunities offered by alternative business structures – including the possibility of management buy-outs.

Daniel Curran looks at how ABSs could improve the offering in the wills and probate market, and where probate genealogists fit in with the mix. On the face of it, he says, this should be one area where the benefits of the ongoing reform of legal services regulation should be most keenly and most beneficially felt by consumers.

Too many lawyers have lost touch with what clients are really looking for and need to do more to create value for their clients, legal strategy expert Stephen Mayson has claimed. He also argued that major law firms need to rethink their cost base as “stripping out cost, based on the traditional ways of working, has gone about as far as it can”.

It is “absolutely inevitable” that criminal legal aid practices will need to morph into a cross between a solicitors’ firm and barristers’ chambers, one of the founders of a groundbreaking firm in the north-east of England has claimed.

Our weekly round-up of other relevant news from elsewhere finds alternative business structures on the minds of virtually everyone, whether in England, Scotland, Canada or the USA. If one theme emerges, it is that everyone is waking up to the threats and possibilities inherent in them.

Legal process outsourcing has taken a further step forward in England and Wales with a trio of announcements – two of which are aimed at the personal injury (PI) market. Both PI initiatives are particularly aimed at helping insurers and brokers handle “low value, low treatment” claims before they progress into a legal process.

The “golden age” is over for barristers as the Bar faces falling income and shrinking numbers, a new report has claimed. However, the Bar still has “an enormous amount in its favour”, according to leading legal consultancy Jomati, which also found evidence of a correlation between the best-performing sets and large numbers of QCs and marketing staff.

Law firms that fail to embrace “legal process management” will quickly lose out to new competitors, such as accounting firms, legal publishers and businesses fuelled by external investment, Professor Richard Susskind has warned. The legal IT and strategy guru has also criticised the approach of many large firms to making cuts during the recession.

There is a £15bn market in consumer and small business legal services and big brands “have the potential to dominate” it in the future, a senior representative of Royal Bank of Scotland (RBS) said this week.

Our weekly round-up of other useful news and articles highlights worries that criminals are targeting failing law firms, accountants wanting more of the legal services market, concerns over new conflicts rules, a call to change the terms of PII cover, the need for more ethics guidance around LPO and much more.

The Solicitors Regulation Authority is to revisit at its next meeting the question of whether to relax its rules on preparations in advance of the launch of alternative business structures next October.