The proportion of firms that expect to change their business strategy in response to the Legal Services Act has more than doubled in the last three years, research by a leading auditor has concluded.
Research from professional services firm Baker Tilly has found a quarter of law firms are now ready to plan in response to the act, compared to 9% when the same survey was conducted in 2010. The results were based on a poll of 60 firms ranging from two to 500 partners.
The number of firms that believe the act will benefit their business has fallen, with 14% saying they expected the legislation to have a positive impact in 2013, compared to 21% in 2010.
The research revealed a divided approach to putting in place a new management structure, with half of all firms planning to alter structures, and 46% having no such plans.
Asked about external funding, just 11% of firms will ‘definitely’ consider seeking an outside investor, 39% ‘may’ consider the idea, and 18% remain uncertain. Just one-third of practices are ruling out external investment.
George Bull, chair of Baker Tilly’s professional practices group, said ‘real change’ is now being driven in UK legal businesses both by shifts in the general market climate and the significant regulatory shakeups of recent years.
‘In some quarters a degree of innovation has been unleashed which is unprecedented,’ Bull said.
It was interesting, he noted, that in many cases, ‘law firms who previously held the view that reforms would have little impact on their business are coming around to the view that they will have to adjust their business model’.
The report acknowledged there had been no rush to embrace alternative business structure status, with just 179 licences currently granted in total by the Solicitors Regulation Authority and Council for Licensed Conveyancers.
Instead, new businesses have emerged that do not require an ABS licence, such as Riverview Law and Stobart Barristers.
The report said ABS-related activity among the largest law firms has been ‘conspicuous by its absence’, and that no large firm had yet to unveil a significantly new or different way of practising corporate law.