Firms ignoring ABS impact are 'sticking their heads in sand' | The Law Gazette

Most solicitors will ‘survive and prosper’ in the revolutionised legal services market, but those who ignore the likely impact of alternative business structures (ABSs) are ‘sticking their heads in the sand’.

That was the stark warning from David Taylor, chair of the Law Society’s membership board, speaking at last Saturday’s Minority Lawyers Conference at Chancery Lane.

Taylor was participating in a session on the liberalisation of legal services in place of Lucy Scott-Moncrieff, deputy vice-president of the Society, who was indisposed.

‘Lawyers are waking up to the fact that things are going to change,’ Taylor told the conference. ‘These reforms cannot be ignored. In five years’ time, legal practices of all types are going to look very different.

‘If solicitors are going to thrive, they need to be active participants in the future.’

Taylor stressed that the savage economic downturn since the reforms set out by David Clementi (pictured) were conceived will have a defining impact on their effect.

In light of the restricted availability of business finance, he said, ‘it is questionable whether there are many venture capital firms out there straining to invest in legal practices’.

He added: ‘Some firms will seek external capital and bring lawyers with other skills into the partnership, but there are others who see ABSs as “the devil’s work” – it’s a very common view. But solicitors have everything to play for.’

Taylor described as a ‘misplaced fear’ the contention that ABSs will force their way into the market and ‘drive out’ existing providers by lowballing – offering legal services at below cost.

‘They wouldn’t be able to recoup their losses because other suppliers would move in to undercut them,’ he said.

At the same session, David McGrady, president of the Institute of Legal Executives, claimed that ILEX has ‘most to gain’ from ABSs.

He disclosed that ILEX may ‘one day’ consider regulating other legal professionals who form ABSs with legal executives.

McGrady also commented on ILEX’s applications for legal executives to be given independent rights in the areas of civil and criminal litigation, probate and conveyancing.

‘We have to be allowed to deliver all the services currently delivered by solicitors,’ he said.

‘That is in the interests of competition and in the public interest.’

In the keynote address to the conference, attorney general Dominic Grieve admitted the advent of ABSs, scheduled for October 6, would be ‘revolutionary’ and that the reforms ‘at times make me anxious’.

But he stressed: ‘ABSs will not be introduced until ministers are convinced that all the appropriate regulatory arrangements have been made, the necessary safeguards are in place and the impact of the new regime on the legal services market is fully assessed.’

Introducing Grieve, Sundeep Bhatia, Law Society Council member for ethnic minorities, had warned that BME solicitors stand to lose out most from the combination of ABSs and government cuts to publicly funded work, because they are concentrated in small firms.

Last week, the Legal Services Board said that it has seen major interest from banks in the lead up to the introduction of ABSs.