OPPORTUNITY: firms should act now to beat international interest and broaden their practices


Solicitors are too complacent about the government's proposals to allow outside ownership of law firms, with the danger that new players will take control of the legal market, an adviser at professional services firm Grant Thornton warned last week.


Professional practices partner Sacha Romanovitch said the legal market could be compared to stockbroking in the 1980s before deregulation, noting that 'only one of those firms exists today in the same form it did then'.


She said: 'A lot of firms really have not thought through the impact of this [proposed legislation]. They think it is going to be their choice as to whether they engage. But if all around you business is consolidating and offering opportunities to clients, and you are not changing, you can become obsolete in the market-place.'


Ms Romanovitch said bulk conveyancing firms and other commoditised areas with a predictable cash flow - such as personal injury - would be very attractive to outside investors. She said: 'Large insurance companies are very good at managing big volumes of transactions, whereas law firms are not that good at it. The obvious thing is for insurers to buy them up.


'If you look at utilities - the French now own all our utilities. Firms should not get too UK-focused. International companies are very interested [in buying UK law firms], for example international insurers and financial services houses.'


Ms Romanovitch added that the opportunity will exist for law firms to buy up teams from competitors to create a much larger practice, by raising funds either through investment from venture capitalists or by floating on the Alternative Investment Market. 'If you raise several million pounds, you can buy the teams of your choice from other firms. What would that do to the other, say, 19 firms [in that practice area]?'


She added: 'Clients are already taking control [over lawyers] with consolidation of panels, and this legislation will mean there are other people who can take control as well. There is a hell of a lot of complacency among lawyers. But there are others who have recognised the opportunity, and are keeping their traps shut in case anyone else realises what they are going to do.'


Rachel Rothwell