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Home / Latest News / Legal Services Act drives changes in law firms’ business strategy

Legal Services Act drives changes in law firms’ business strategy

A quarter of law firms expect  to change their business  strategy in response to the  Legal Services Act, according  to a report released by Baker  Tilly.

The figures show an increase  over the last three years in the  number of firms that expect to  change their strategy – up from  9% in 2010, to 25% in 2013.

The report also revealed a drop  in the number of law firms that  believed the Legal Services  Act will have a positive effect  on their business, with 21%  saying they expected the legislation to have a positive impact in 2010, compared to a  much lower 14% in 2013.

The report, entitled Legal Innovation 2013, reviews the  changing landscape for the  legal services sector, studying  how businesses have changed  their structure, funding, service delivery, management and  people, in both the UK and on  an international level.

It also examines how the landscape will change within the  legal market in response to recent changes in the sector.

Steve Carter, Baker Tilly’s  head of professional practices  whose area of responsibility  covers Wales, said: “It is clear  that the UK legal market is now  undergoing palpable change in  some quarters as it reacts to  regulatory change and the  shifting business climate.

“We are now seeing a lot of  rather innovative legal businesses starting up and those  who run law firms are gradually changing their attitude,  with more conceding that they  may need to adjust their  strategy.”

He added: “The biggest shifts  have been in the personal injury market where the regulatory change has been  greatest. Elsewhere in the legal  sector, most notably those  providing legal services to  businesses, new legal business  models are starting to emerge.

“However on balance these  have not proven attractive to  investors and any innovation  that has taken place has not yet  made a substantial impact.

“This is particularly evident  among legal businesses  providing services to business  clients where we have not yet  seen a real game changer enter  the market.”

In April 2012, Cardiff-based  personal injury firm NewLaw  Solicitors became the first  legal disciplinary partnership  in the UK to be licensed as an  alternative business structure  (ABS) by the Solicitors Regulatory Authority.

NewLaw’s chief executive  Helen Molyneux said: “This  report reveals what we have  already known for some time:  that the legal services landscape is changing and we will  have to adapt to suit the needs  of our customers, even if this  means quite significant  changes to our business  model.

“When we set up nine years  ago, it was during a period of  uncertainty in the legal services market. Everybody knew  that the legislation would be  changing and the legal services  market would be opened up to  non-lawyer ownership, so our  strategy from the beginning  was to be adaptable.

“The biggest challenge for law  firms is attracting customers.  We decided that we should  focus on what we are good at –  delivering quality legal services – and partner with commercial businesses who have  access to the clients.

“Our model involves setting up  joint ventures with insurers  and other consumer-facing organisations to provide legal  services for their customers.  We have established three joint  venture ABSs so far and have a  few more in the pipeline.”

Gareth Williams, senior partner at Hugh James, said:  “These are without doubt interesting and challenging times  for law firms who are having to  deal simultaneously with the  effects of both the Legal Services Act and the funding  changes brought in by the  Jackson reforms. 

“However, all professions  need to change with the times.   For us, these changes create an  exciting opportunity to  strengthen our offering to our  clients.”

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