Tag Archives: legal services

ABS two years on: cautiously optimistic

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We are just at the second anniversary of licences being issued for alternative business structures (ABSs).  In the first year, about 40 licences were issued, and progress seemed slow. A year later, there are still only two licensing authorities, but there have been roughly another 200 new licences. The licences we expected for Abbey Protection, AIM-listed Quindell, Knights (backed by James Caan), and BT Law have all emerged.  Conveyancing Direct (connected to Connells estate agency and Skipton Building Society) and Jordans (the publisher) have gained licences, as has DAS Law (Bristol law firm acquired by the legal expenses insurer, itself part of insurance giant Munich Re).

The rate of ABS adoption is hotting up.  Or is it?

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Legal services regulation review

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First, my apologies to followers who have been waiting for almost a year for another ‘occasional’ thought.  I won’t burden you with the personal and professional reasons for the lull!

I confess to being rather surprised when the Ministry of Justice announced that it was undertaking a comprehensive review of the framework for legal services regulation.  It is not that long since the Clementi Review (although I suppose that if a week is a long time in politics, nine years could be a very long time in legal services).  But we are still in the implementation phase of the Legal Services Act, and just shy of two years since the arrival of alternative business structures.  Surely too early?

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Law firm partnership: the Grand Delusion

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It might not feel like it to some, but the economic environment for large law firms has been benign for a long time. It has been difficult not to make money. According to Legal Business, the top 100 UK law firms (that is, less than 1% of the 10,000 or so in the UK), still manage to gross over £17.5 billion, even in these supposedly tough economic times. That’s at least 50% of the total value of the legal economy. And for the more than 8,000 equity partners in those firms, this produced an average net profit share (PEP) of almost £650,000. By most people’s reckoning (even in the world of clients), that’s a lot of money for a lot of people – and it is only an average. It’s not so much the size of any individual reward that’s the issue (the range is reported as £138,000 to £1,840,000 – and it’s no longer Slaughter and May, or any other Magic Circle firm, at the top): rather, it’s the sheer number of people who are able to extract this level of averaged reward in a reactive service market that is dependent on client activity.

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