The delay in the relaxation of rules preventing barristers from entering law firm partnerships has been blamed for the low take-up of the first wave of new legal business structures.
According to the latest Solicitors Regulation Authority figures, 216 legal disciplinary partnerships were up and running on 10 May. Most LDPs had only one or two non-solicitor partners, with 147 non-lawyer partners in total, and 99 lawyers who were not solicitors.
Just seven barristers were partners in LDPs, despite a widely held assumption at the time LDPs were launched that barristers would form a large proportion of LDP partners.
Firms have been able to convert to LDP status since 31 March 2009. LDPs allow non-solicitors to form up to 25% of the partners in a law firm. They precede full alternative business structures (ABSs), which the Legal Services Board plans to sanction from October 2011.
Management consultant Simon Young said that, while take-up so far has been lower than expected, the changes will have allowed some firms to ready themselves for the advent of ABSs. He added that take-up might have been higher if barristers had been able to enter law firm partnerships from the off, rather than having to wait for the Bar Standards Board to allow such moves from 1 April 2010. Because non-lawyer LDPs will have to apply to become ABSs from late 2011, and the rules on ABSs have not yet been finalised, there was too much uncertainty for some firms to convert to an LDP, said Young.
Of the 147 non-lawyer partners in law firms, 34 are accountants; two are financial planners; one is classified as a teacher/lecturer; 33 are classified as ‘other’; and no profession is given for the remaining 77 who are not solicitors. Of the 99 lawyer LDP partners, 82 are legal executives; seven are licensed conveyancers; seven are barristers; two are costs draftsmen; and one is a patent attorney.
LDP conversion has been taken up by firms of varying sizes but are mostly smaller firms.