S O U T H

4 August 2011

The Future of the Legal Profession – a 2011

perspective

Sussex JLD

Martin RichardsonProfessional Development Consultant, Law South

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4 August 2011

Solicitors – some historical facts (1)

• Sole practitioners and partnerships• The Law Society – 1825 – the professions

governing body• The Partnership Act 1890 – regulated the

partnership as a business entity• The Companies Act 1948 – limited the

number of partners in a partnership to 20

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4 August 2011

Solicitors – some historical facts (2)

• The Companies Act 1967 – removed the restriction on the number of partners

• The Limited Liability Partnerships Act 2000 – created the limited liability partnership (LLP) as a quasi corporate entity. Partners become Members.

• The Legal Services Act 2007

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4 August 2011

The LSA 2007• Enacted following the Clementi Report of 2004• Clementi set up with a view to recommending:

- the opening up of the legal services market to provide greater competition- the abolition of the solicitors closed shop regarding the provision of legal services

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4 August 2011

Some key provisions of the LSA

• The setting up of the Solicitors Regulations Authority (SRA) and the Office for Legal Complaints (OLC)

• The creation of Legal Disciplinary Practices (LDPs) and Alternative Business Structures (ABSs) as new business entities for the provision of legal services

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4 August 2011

The tripartite management of the profession

• The Law Society – the solicitors representative body cf: BMA

• The SRA – deals with qualification, CPD and professional conduct matters cf: GMC

• The OLC – is the final arbiter on client complaints and consequential issues

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4 August 2011

The new business entities

• The LDP – permits up to 25% of the partnership capital to be owned by non-solicitors e.g. legal executives, senior managers, other professionals

• The ABS – any non-traditional partnership / LLP providing either core or ancillary legal services

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4 August 2011

Examples of ABSs• The LDP• Existing partnerships wishing to float and

attract external capital, e.g. Irwin Mitchell• Existing corporates wishing to add legal

services to their existing product portfolio, e.g. The Co-op

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4 August 2011

Facilitating the ABS• Replacement of the Professional Code of Conduct

2006 by the 2011 version• OFR rather than prescriptive rules• Based on the 10 mandatory principles of practice• Authorised bodies, COLPs and COFAs• Client focused• Flexibility encourages entrepreneurs and external

capital

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4 August 2011

Implementation

• All now implemented except the SRA licensing certificate for authorisation under the new regime

• 6 October now deferred ?by weeks only

• So ABS applications delayed

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4 August 2011

The effect of the LSA• Existing firms• Work specialisms• Commoditisation• Leverage and profitability• Pricing • Fee-earning staff composition• Support staff composition

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4 August 2011

Existing firms• Magic circle – no change• Top 75 (50+ partners) – minor but focused adjustments to

strategy and practice• Niche practices – no change provided top quality and

excellence• Traditional High Street practices:

- merge- be bought out (? by a corporate)- die

• Medium sized full service firms – merger mania

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4 August 2011

Work specialisms• Death of the smaller full service firm• Excellence in chosen fields of practice• Build networks to support clients in other areas of

work• Ongoing strategic thinking to keep ahead of the

game when new areas of practice start to develop

• The clients lead

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4 August 2011

Commoditisation• Template practice• Extensive and comprehensive use of IT• Resi conveyancing, PI, wills and increasingly

parts of more sophisticated areas of practice• Potentially highly profitable• This is what will interest the external capital

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4 August 2011

Leverage and profitability• The right staff at the right level doing the

right work• Delegation to the lowest level of competence• Team and project management / leadership

become critical• Applies to rocket science, widgets and

everything in between

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4 August 2011

Commoditised worke.g. resi conveyancing

Ps

SFEs

JFEs

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4 August 2011

Standard worke.g. basic corporate

Ps

SFEs

JFEs

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4 August 2011

Rocket Sciencee.g. complex tax

Ps

SFEs

JFEs

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4 August 2011

Pricing• To reflect the type of work (see previous

models) – commoditised cheap; rocket science expensive

• Time recording indicative not definitive• Fixed fees, contingency fees and value added –

or a mix• Efficiency as well as effectiveness – will be a

capital as well as client demand

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4 August 2011

Fee-earning staff composition

FEWER SOLICITORS

MORE PARALEGALS

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4 August 2011

Support staff composition

• Firm run as a business• More professional executives• Greater respect as a result• Partners/members/shareholders not

running the firm day to day• Less junior staff; more fee-earner

involvement in administration

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4 August 2011

To sum up...• All change for some firms

• Increased competition

• Therefore must be increased efficiency

• Maximising use of IT

• Costs down; prices realistically competitive

• Business and commercial focus

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4 August 2011

Other SRA initiatives• Work Based Learning (WBL) – a scheme

currently being piloted and designed to take the place of the training contract thus enabling people from various backgrounds to qualify as a solicitor

• CPD – a review of the current system is in the pipeline

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4 August 2011

The Bar• Increasing number of barristers working

in firms• Gradual demise of generalist chambers?• Specialist Bar surviving, but...• Merger of the professions in ?20 years• Only prevented by tradition