The Legal Services Act has introduced Alternative Business Structures, a concept which has become one of the most controversial aspects of the Act. Before this Act, law firms could not accept external investment or go into business with other professionals, such as those offering financial law services. The Act will change this, allowing lawyers to form partnerships with non-lawyers, accept outside investment and even operate under external ownership.
Those in favour of the Act say this increased flexibility in financial law services merely reflects the need for increased consumer choice and access.
On the other hand the risk is that ‘Tesco’ law might have the same consequences as supermarket food, namely convenience with a parallel reduction of quality and diminishing effect on providers of independent financial law services.
Most high street firms are worried about the impact of ABSs on their business. It is likely that most small law firms will have merged within the next five years, such as with accountants or estate agents, in order to sustain their position. Such mergers will enable law firms to provide financial law services and provide value for money to its clients.
For larger providers of financial law services ABSs will impact the structure of firms as a whole, opening up opportunity for alternative methods of funding growth among top law firms.
The Legal Services Act reflects the wide-ranging and diverse nature of the legal profession and widens the financial law services market even further by making it possible for new regulatory bodies to come along and be designated to grant rights to individuals and firms to provide reserved legal services. This means more competition for the same position and non-lawyers competing for legal positions.
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