Newspaper article The Evening Standard (London, England)

Shake-Up That Will Cut through the Maze of Legal Regulation

Newspaper article The Evening Standard (London, England)

Shake-Up That Will Cut through the Maze of Legal Regulation

Article excerpt


THE Legal Services Act 2007 is a catalyst for growth within the legalprofession, Jack Straw said last week. Praising last year's reforms, the LordChancellor told solicitors they would provide "a radical opportunity for theprofession to put itself on a more competitive footing".

When the Act comes fully into force, legal services providers will no longer beregulated through professional bodies such as the Law Society and the BarCouncil. Instead, lawyers will be able to choose any "approved regulator", nodoubt selecting whichever one they think will be a soft touch.

So the changes may be seen as the lawyers' "Big Bang", equivalent to Cityderegulation in 1986.

By 2012, approved regulators will be able to license what the Act calls"alternative business structures".

These will include law firms owned by outside shareholders.

And, as early as next year, solicitors will be allowed to take non-lawyers intopartnership provided they make up no more than a quarter of the firm.

But why wait that long? Last week, a mid-market private-equity house pronounceditself ready to invest in a law firm immediately.

"I could write a cheque tomorrow," says Jeremy Hand, managing partner of LyceumCapital. "And in addition I have access to very deep pools of capital, outsideour discretionary fund."

Hand's backers are looking for a midmarket firm with an annual turnover ofbetween [pounds sterling]20 million and [pounds sterling]80 million. At the same time, they are talking tosmaller firms that might be receptive to takeover bids.

"There are some very interesting little firms out there that are quiteinterested in a change of ownership," Hand says. "And they don't want to mergetheir practice with another firm. They want cash."

But buying up smaller firms is only part of Lyceum's strategy. They regardthemselves as experts in "the business of running businesses"not something that lawyers are necessarily very good at.

How can investors buy into a law firm before the Legal Services Board has beenestablished and the new regulatory structures are in place? The answer is thatnot all areas of lawyers' work have to be done by lawyers. …

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