lawbooks-370x229

Tim Cheadle (UK) - The Legal Services Act 2007 - Implications for Law Firms

2011 will see history in the making for the UK legal sector. The Legal Services Act (LSA) 2007 (to be fully implemented in October) will completely transform the legal sector landscape. The Act is primarily driven by the objectives of promoting diversity, increasing competition, improving public access to justice, and ultimately protecting consumers' interests. It is believed that these objectives will in turn deliver value for money to the consumer and drive innovation in a typically traditional industry.

The Legal Services Act 2007 requires that the Solicitors Regulation Authority (SRA) support the Act by encouraging transparency and accountability among legal services providers. On its part, the SRA believes that this is an opportunity to overhaul and modernise the regulation of the profession. To this end, it has developed an ‘outcome focussed' approach in an attempt to move away from the current prescriptive style of regulation to a more qualitative way of evaluating professional conduct and quality of legal services delivered to consumers.

Compliance is a complex beast and today many argue that regulatory compliance in the post-LSA world will be even more complicated than previously, due to its open-ended, ambiguous nature.

Law firms therefore are faced with both challenges and uncertainty. However, more often than not, change is good. By embracing the new regulation wholeheartedly, law firms will find that the LSA removes numerous restrictions on how they can run their businesses. It is a platform for innovation and in all likelihood, opportunities will be plentiful. Nonetheless, it does require a change in mindset and a re-think of business objectives and strategy for growth plans.

Moving forward, legal service providers will be able to structure their businesses in different ways - as Legal Disciplinary Practices (LDP) or Alternative Business Structures (ABS). The latter is causing the most concern to the sector - ABSs can be wholly owned by non-solicitors. This means that practically any organisation, regardless of whether it has prior legal market experience, can offer legal services to customers. Recently, high street retailer WHSmith announced that it will be offering legal services such as conveyancing, personal will packages and fixed-fee advice sessions to customers visiting its over 1000 stores via a partnership with Quality Solicitors. Almost 70% of the UK population visits these stores annually. As bigger household brands enter the market, they could potentially drive out smaller and stand alone legal practices.

While the full impact of the legislation is yet to be seen, it is almost certain that competition in the industry will increase. Law firms must re-assess their business objectives and devise strategies to poise themselves to take advantage of the post-LSA environment. More importantly, they must change their way of thinking to become more entrepreneurial and commercial in their outlook.

Going a step further, there is a growing belief that a multi-disciplinary practice (MDP) is the future business structure of legal professional services organisations. So, practices will not just consist of solicitors, but also accountants, independent financial advisers, estate agents, surveyors, and any other professional services providers, working together under one roof. Clients will be able to solicit advice on conveyancing, tax and financial planning, personal injury and wills, from a single firm.

Such a structure will pose numerous legal compliance challenges for organisations. The ensuing entities will not only need to comply with the LSA, but also with legislations of other industry sectors like accountancy and financial services. Should these MDPs have international aspirations, they would also need to comply with country specific and common international laws.

Clearly, to operate profitably, legal practices or MDPs will need to do more than just be good at law and/or any other discipline - they will need to be equally good at collaboration, project management and financial planning. Achieving synergies and cost efficiencies in the day-to-day operations of practices will become imperative to ensuring a healthy bottom line. Technology will play a key role in enabling such organisations. And perhaps for the first time, law firms will now need to consider technology that is wider in scope than the traditional practice and case management systems used up until now.

Adopting workflow-based enterprise resource planning (ERP) systems that encompass everything from client management, case management, resource planning, finance and accounting, compliance, reporting and business intelligence, is a good idea. Such tools will help ensure seamless regulatory compliance, best use of resources and smooth day-to-day business operation - all contributing towards achievement of the larger commercial objectives of the organisations and overcoming the tactical challenges posed by the LSA.

By Tim Cheadle, Managing Director, LexisNexis Enterprise Solutions

PREVIOUS ARTICLE

« Brian Mort (Europe) - Agile Business Intelligence

NEXT ARTICLE

Praveen Shivaswamy (India) - Smart Green Home: an Indian Perspective »

Recommended for You

International Women's Day: We've come a long way, but there's still an awfully long way to go

Charlotte Trueman takes a diverse look at today’s tech landscape.

Trump's trade war and the FANG bubble: Good news for Latin America?

Lewis Page gets down to business across global tech

20 Red-Hot, Pre-IPO companies to watch in 2019 B2B tech - Part 1

Martin Veitch's inside track on today’s tech trends

Poll

Do you think your smartphone is making you a workaholic?