The future of firms: Starbucks solicitors?

As solicitors become more disillusioned by government inaction on multi-disciplinary partnership legislation, firms are looking to other means of achieving flexibility where the options are unregulated, writes Jeremy Fleming

Trendy solicitors who like to keep tabs on celebrities will have noticed that Oasis' lawyers Statham Gill Davies were in the news last week, when they sold the non-contentious side of their practice to professional services group Tenon.But solicitors keeping their eye on the future of legal practice may have been more impressed by the transaction - and what it bodes for the future of the profession - than the niche firm's celebrity clients.For firms becoming disillusioned with the government's prevarication over multi-disciplinary partnership (MDP) legislation - it has signalled that there may be no room for enabling legislation in this term of office - the Statham/Tenon route may suddenly appear attractive.

The move is also a precursor of the concept of companies 'owning' law firms, for some the next stage in the evolution of the profession after MDPs.

The idea of The Virgin Law Firm or Starbucks Law, with an adviser on every corner like coffee shops, is one which has been circulating for some time in people's crystal balls.Certainly, there is no shortage of other firms interested in the Statham Gill route.

Alison Crawley, the Law Society's head of professional ethics, confirms that her department has been in discussions with practices which are considering the model.Matthew Blows, the corporate partner at City firm Macfarlanes who acted for Tenon, says he has had a lot of telephone calls and general interest from lawyers who did not realise that this could be done.

'I'd be astonished if others didn't try and do the same thing,' he says.Ed Nally, a partner with Bolton-based Fieldings Porter and chairman of the Law Society's regulation review working party, says the case highlights 'the need for more imaginative arrangements to enable external investment in law firms'.Because of the current ban on fee-sharing, Statham Gill's solicitors lose their practising certificates on joining Tenon, but the litigators - who must remain regulated - have formed two-man law firm Anderson Forbes, which will work closely with Tenon.The deal is quite straightforward, and firms whose lawyers do less of the work requiring regulation - conveyancing and litigation - can join a company to provide services as non-lawyers any time.The drawbacks are twofold: first there is the practical difficulty of changing the partnership structure, and then there is the cultural difficulty - for the lawyers - of starting again within a corporate structure.But the advantage is the mobility of capital that the corporate structure gives, and the freedom to offer many services under one roof.It seems unlikely that the Statham/Tenon case will be the first of many, at least at this time.

Ms Crawley maintains that the structure may well suit Tenon because of its specialist media and music services.If lawyers leave formal qualifications behind when joining a company, they are likely to join one which has a reputation - a brand that can replace the reputation of a fully regulated firm.

This would perhaps be of particular appeal to a niche practice.Ms Crawley identifies lawyers specialising in mergers and acquisitions work as others who might be tempted to make the leap.

She explains: 'Litigation is usually not directly related to transactions, and often conveyancing is not critical to mergers because all that is transferred is the share capital.'However, Ms Crawley says that many firms are wedded to regulation.

'They will be worried about the way that clients may perceive them if they make a move.'Mr Blows agrees that it is more likely to be popular among specialist firms, and also among smaller or medium-sized firms rather than larger practices.

'The difficulties of dividing up a firm the size of, say, Clifford Chance, would just be too big.

But individual departments of larger firms which fall apart may choose to go down this route.'Mr Nally says the fact this has happened to such a niche firm shows how prospective external investors would want to cherry-pick departments and specialists to invest in.The most resistance to the idea is likely to come from older solicitors, Ms Crawley suggests, who do not necessarily share the enthusiasm of their younger colleagues for mobility of profits and job flexibility.

The issue could see a division between the generations of the profession.Therefore, she thinks change is required: 'It is a shame if these people who have trained as lawyers then have to move away from the profession to work in the way that they want.

It would be easier if MDP regulation allowed them to do it.'Mr Blows thinks the Tenon model's popularity will be transient, and that regulated MDPs would immediately replace them if introduced.Mr Nally maintains that it is important for the profession and the public that these new arrangements should be capable of regulation by the Law Society.

He says: 'It seems odd that the current restrictions compel solicitors to surrender their practising certificates...

We should be facilitating these arrangements so that they can be maintained in the regulatory framework.'He adds that lawyers are receiving slightly mixed messages from government - on the one hand competition among the professions is being emphasised as an area for reform, but on the other there is not the sense of urgency required to legislate to enable the Law Society to introduce radical reforms.In the meantime, if other companies follow the Tenon model, this might make the government sit up and realise that firms will go down this route to unregulated flexibility while no regulated alternative exists, and that could encourage it to find space in the legislative timetable.