Survival of Fittest as Legal Firms Adapt to Ever-Changing World
Byline: BETHAN DARWIN LAW & MORE
LAW is big business. The UK legal market was worth an estimated PS25.6bn in 2011.
However, the legal profession is undergoing a period of unprecedented change:| Liberalisation of the market Since October 2011 and the introduction of Alternative Business Structures you no longer need to be a lawyer to own a law firm. The opening up of the market is intended to give greater choice to consumers of legal services and ensure more competitive pricing, leading to the nickname "Tesco law". In fact Tesco has not (yet) entered the legal services market and it is the Co-Op supermarket that has set itself the goal of being the biggest provider of legal services by 2022.
The ABS structure also allows law firms to seek external investment James Caan recently invested in two law firms and gambling entrepreneur Bert Black of Betfair has invested heavily into Leeds-based Brilliant Law, a firm founded by non-lawyers. The thinking is that applying non-lawyer management processes to law firms will make them more profitable. The concern among lawyers is that their client-first approach will be trumped by a requirement to achieve returns for the investors.
The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) comes into force in April This act introduces most of Lord Justice Jackson's recommendations aimed at bringing legal costs under control. Referral fees are banned come April, transforming the way personal injury lawyers do business. Lawyers will no longer be able to pay for the claims referred to them by insurance companies and claims management companies.
Success fees (the uplift on legal fees which underpins the business model of "no win, no fee") and the insurance premiums for insuring against the risk of paying the other side's legal costs will no longer be recoverable from the losing party. The widely held view is that insurance companies will soon launch ABS law firms so that profits lost from the banning of referral fees are made up by profits earned on the personal injury legal work. …