Fiona Woolf urges law firms to confront the challenge presented by proposed new business structures while calling for clear regulation


The legal services sector is facing great change, particularly in the way that it is regulated, in relation to legal aid and the potential involvement of external investment and non-lawyers.



Already, there is increased competition and changing patterns of demand for legal services, as well as the ‘commoditisation’ of legal services such as domestic conveyancing and personal injury work – with the Halifax and the Co-op offering legal services through ‘virtual’ alternative business structures (ABSs).



The Legal Services Bill, which is now in the committee stage in the House of Lords, will challenge us to find new ways to deliver legal services, whatever our area of practice and whatever kind or size of firm we work in – as well introducing potential competitors.



Multi-disciplinary practices and outside investment in, or even external ownership of, whole firms represents radical change in a legal profession that is internationally regarded as very advanced.



The priorities of the Law Society’s representation arm are to ensure that the new regulatory framework does not conflate consumer interest with the public interest in pursuit of a competitive market, does not stifle competition and innovation within the profession, and provides a level playing field for all legal service providers – solicitors must be able to compete fairly and effectively with any new entrants.



Chancery Lane is launching a new discussion forum focusing on the issues around ABSs on 12 February. It is vital that law firms start to consider what ABSs might mean for them sooner rather than later. We will be sharing our vision as to how we think they should be regulated.



The only prudent planning assumption is that there will be increased competition and firms will need to focus on the efficient delivery of legal services. However, this must not be at the cost of sacrificing professional values or independence from government.



From speaking to many solicitors, I know that a good number see the advent of outside ownership and ABSs as a threat. We do not know what the impact on small practices will be. We do know – from conversations I have had with ministers – that it is intended that consumers will receive the same protections from ABSs as they will from conventional legal practices.



Consumers are demanding a responsive, high-speed, high-standard and value-for-money service. The key to delivery lies in efficiency and proficiency in IT. Management skills will be important as we grapple with understanding what professionalism actually means in the 21st century.



Success for firms will depend on both innovation and recognition that the business of law is vital. Like other professionals, we will need to adapt to this market change quickly, as we have to all others. The firms that will survive and prosper, whatever their size, will be those that embrace a more business-oriented approach, in tune with the aspirations and culture of their clients.



Putting management excellence and quality service delivery at the top of the agenda is no longer optional. Firms will not be able to attract capital without good management solidly in place.



We must also protect our brand, by which I mean the collective reputation that distinguishes us from the growing band of unqualified pretenders in the legal services market. The factors that give us the edge are many and varied. For me, our key strength lies in the highest of ethical standards; for example, putting our clients first and strict adherence to rules relating to numerous aspects of practice, including conflicts of interest and privilege.



Maintaining standards is the point of the new code of conduct, which has been a long time in gestation. It represents principles-based regulation that is designed to avoid conduct micromanagement and to promote competitiveness and innovation. Broadly, the principles are the same.



Now that regulation is the responsibility of the Solicitors Regulatory Authority (which takes that name from 29 January), the Law Society’s job is to help our members prepare for the the new regime and to monitor how it is working. We will be publicising our programme of support in the coming weeks and months as we get closer to sign off, but in terms of monitoring, we will need input from practitioners. Let us know of any difficulties the new regime generates, so that we can work with the regulator to amend the code – benefiting solicitors and clients alike.



In all aspects, the guidance and rules governing solicitors must be clear and proportionate, making compliance simple. Our new regulatory affairs service is already focused on hammering home the profession’s message to the regulator on a number of key issues and this work will make a real impact in 2007 as we work through the issues solicitors highlighted in the ‘Setting the agenda’ survey towards the end of last year.



The coming 12 months will also see the Law Society continuing the important redesign work of its representative functions, which we began last year, so that it can meet the needs of its members – as their dynamic and proactive national professional body that will support them in getting to grips with the inevitable regulatory and market changes.



Fiona Woolf is the Law Society President