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Wed 8th September, 2010
News
Will Your Firm Offer Legal Services in the Future? |
7th March 2006 |
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The prospect of mortgage brokers and estate agents delivering legal services in competition with the traditional High Street solicitor could soon become reality. The government are keen to permit one-stop shops for selling related services (such as bundling financial products like mortgages together with legal services like conveyancing) and want non-legal firms to form organisations with solicitors to offer integrated legal and associated services.
A recent survey has revealed that just under a third of consumers would purchase legal services from estate agents (including estate agents with mortgage brokers in-house) once the legal services market is liberalised. This figure is likely to rise significantly with marketing effort.
The survey by IRN Research and Key Note of 1,000 individual consumers suggested that 56% would buy legal services from banks and building societies with insurance companies being the next in line with 42% of the consumer vote. Motoring organisations such as the AA and RAC ranked next with 39% followed closely by accountancy firms. Just fewer than 30% would use estate agents and supermarkets came in at 25%. Only 9% would use claims management companies.
Sir David Clementi’s discussion paper has evolved into a far-reaching White Paper called “The Future of Legal Services: Putting Consumers First” which envisages the legal profession being presented to consumers in a totally different way to the traditional High Street format. The Government’s agenda is based on better choice and service delivery for the consumer, increased competition and the desire to develop the role of business within the law. Diluting the role of lawyers and allowing professional commercial management into legal firms should, according to the government, increase efficiency and reduce prices. This all means that the traditional High Street solicitor is firmly under attack.
The government has suggested that law firms might work in flexible licensed “Alternative Business Structures” (ABS’s). Allowing non-solicitors to be equity partners or shareholding directors. External investment will be permitted and the White Paper even envisages eventual stock exchange flotations. Only the Head of Legal Practice in an ABS must be a solicitor whilst all the other business owners can be non-solicitors. The role of the Law Society will be reviewed and may even be removed as the sole regulator of legal services. In any event, the government intend to place an oversight body called the Legal Services Board over the entire legal profession including barristers, licenced conveyancers, legal executives and others.
Now this may strike fear in the heart of most High Street solicitors but the business minded lawyers amongst us are relishing the future prospects and opportunities as are non-solicitors who see the huge potential markets in legal services such as conveyancing, personal injury and wills, worth an estimated £19 billion of revenue in 2003 and increasing annually.
Insurers, banks, motoring organisations, accountancy firms and estate agents have already started preparing for the implementation of the White Paper by working closely with a chosen few business minded law firms by offering one-stop shop related services under their brand, in a seamless process with the same service ethos to the brand’s consumer i.e. the estate agent offering home information packs and conveyancing services or the car insurer offering legal services for accident claims. Some businesses have already taken one step further by arranging ownership and investment structures in advance of the proposed regulations. For instance, certain estate agents have purchased conveyancing operations and a few accountancy firms have invested in business law firms.
The Law Society has responded by suggesting that lawyers need to promote their virtues of service and independence against possible “one stop stitch up shops” offered by large financial institutions. Clearly there must be safeguards and the independence and integrity of the profession must be preserved. However, as long as the consumer likes the potential benefits and convenience of being offered a divorce service with their banking or a will drafting service with their weekly shopping it seems inevitable that reform will take place in the near future.
Switched on law firms need to be clear of their business model and how they will deliver legal services in the future. Some have perhaps even started speaking with likely ASB partners about potential future business opportunities. As for the traditional high street solicitor, of course, there will always be a need for an independent local professional. However, realistically the chances are that the High Street will not be able to compete for the usual High Street bread and butter legal work with household name organisations or forward thinking financial services businesses operating an ASB model through highly focused and technology driven law firms.
A draft Legal Services Bill will be published in the current parliamentary session. As the legal services markets begins to open it is highly likely that there will be interesting commercial opportunities for estate agents and mortgage brokers.
For further information, please do not hesitate to contact Mr Bill Dhariwal, Managing Partner, Lawcomm Solicitors, Bellevue House, Southampton SO15 2AY DDI: (023) 8038 4404 E-mail: bill.dhariwal@lawcomm.co.uk
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