Last week I gave a talk to solicitors and practice managers at a workshop addressing the issues arising from the Legal Services Act 2007 (“LSA”) and, in particular, what the implications of the so-called “Tesco law” will be for firms. There was some good discussion between all the delegates and there have also been some interesting comments left on the earlier post I wrote on the subject.
The LSA or, to be more precise, Alternative Business Structures (ABSs) will mean different things to different people, depending upon where you are positioned in the profession. For instance, the Magic Circle firms will not be at all concerned by the prospect of “Tesco law” offering wills and residential conveyancing as they no longer do that sort of “private client” work. They probably have no need for external injections of capital from non-lawyers either. They are, however, concerned that other legal markets will remain tightly regulated and will not be able to enter into multidisciplinary partnerships in the US, for example. Smaller law firms who are not interested in cross-border work may well welcome the opportunities that private equity can provide – perhaps to fund an upgrade of IT systems as one delegate suggested to me. For firms that are prepared to dilute the partner’s/member’s ownership by allowing in non-lawyers the introduction of ABSs is potentially exciting. The message that came through is that Tesco Law offers opportunities to these sorts of firms.
There was consensus though that for the smaller law firms, based on the high street and relying on “commoditised” legal services (e.g. wills/probate and conveyancing) for their bread and butter, Tesco law is a threat. All delegates were sure that high street firm of solicitors as we now know them offers a quality service to clients but competing with Tesco law on price grounds alone would be an unwinnable battle. Many high street practitioners face the future with dread.
I don’t think this necessarily has to be the case, particularly for practitioners undertaking non-commoditised work (by which I broadly mean family disputes, all litigation apart from lowish-value road traffic accident personal injury claims and anything with any emotional involvement in for the client). Clients are increasingly price-sensitive but they also want a quality service: the “dial one for wills. Dial two for conveyancing and dial 3 if your ex-partner won’t let you see the kids this weekend” type approach just won’t work for most people. One of the respondents to my earlier post, John Flood suggests this may be too complacent though – what will happen if Trade Unions, who are used to funding personal injury litigation, decide to get involved more directly and either buy into a law firm or set up a new business structure with a Citizens Advice Bureau or Law Centre? I think that is a good point albeit I can’t see that a Trade Union would want to get involved where it couldn’t recover its costs from the losing party. In other words they may be happy to fund personal injury litigation but not a bitterly fought costly residence/contact dispute between parents.
Clients may initially want to adopt a Tesco law solution but they won’t do so again if the service they get is cheap and unimpressive. Many of the delegates at the workshop made the point, strongly, that the potential clients using Tesco Law in the first place (before getting disillusioned) would represent a huge loss to the profession. I agree and, in my view solicitors need to be promoting themselves much more pro-actively to compete against this.
Change is on the way and it doesn’t necessarily have to mean the destruction of the profession. I will suggest how they can do that without utilising massive financial cost in my next post. As ever I would welcome your comments on these issues; please feel free to let me know what you think, or email me directly at firstname.lastname@example.org or phone on 0207 464 8433