New legal business structures are more productive than traditional firms and are better at dealing with complaints, new Legal Services Board research has found.
The oversight regulator today produced research that found alternative business structures had a higher turnover per fee earner.
The research was designed to reflect changes in the market since the Legal Services Act 2007.
In general, it found liberalisation of business ownership has had a positive effect on the market so far, in terms of productivity, complaints handling, and use of technology.
Chris Kenny, LSB chief executive, said: ‘The results, although early and somewhat tentative, already show that real benefits are being delivered for the public.’
Accounting for inflation, research found the median amount of income generated per fee earner has fallen from £87,000 in 2010/11 to £85,000 in 2012/13.
In 2010/11 there were 378 LDPs, 491 in 2011/12 and 429 in 2012/13, with 39 having closed and 23 LDPs converting to ABS. However, while this group of firms never represents more than 5% of all firms, they accounted for 14% of market share in 2012/13.
Firms who were LDPs in 2012/13, were statistically more likely to have seen an increase in turnover in the past three years – 57% compared to 49% for all providers. Under transitional arrangements, all LDPs will have to convert to ABS status eventually.
The results https://research.legalservicesboard.org.uk/news/latest-research-2/ also found a link between productivity and less face-to-face delivery of services, with turnover per fee earner less among firm with a higher proportion of local clients,
Research found ABS firms were concentrated in the personal injury sector, taking up 20% of the market share, split between new entrants and existing firms who converted to ABS status.
On complaint handling, data showed evidence of firms improving their responses to initial complaints.
The LSB report said in 2012/13, ABS organisations resolved 93% of complaints received, LDPs 88% and other organisations 83%. Further, ABS organisations resolved 11 complaints for every one referred to the Legal Ombudsman. For LDPs this was five, and for other solicitors firms this was four.