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The Legal Services Act –
what does it all mean?
Charles Layfield
14 July 2011
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A decade of ignorance
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2001
2004
2005
2007
2011
OFT report on competition in the professions
Clementi report
DCA White Paper – Future of Legal Services
Legal Services Act
6th October
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Objectives of the LSA
• Ensuring a common baseline of regulatory compliance
• Better redress through a new ombudsman
• Deregulation and greater competition
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What is an ABS?
• A licensing framework for reserved activities where
ownership is 10%+ nonlawyers
• No new structures as such
• An alternative to a law firm wholly owned by lawyers
• Ownership by nonlawyers carrying out a reserved
activity
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Reserved activities
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Conveyancing
Probate
Notarial
Commissioner for oath functions
Rights to conduct litigation
Rights of audience
Will writing?
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Requirements of an ABS
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At least one nonlawyer as a shareholder or member
Head of Legal Practice
Head of Finance & Administration
Both have statutory regulatory & reporting duties
Integrity of the ABS rests with the HoLP
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Nonlawyers - why become an ABS?
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Own and operate a law firm
Share or own the revenue/profit
Greater control over the supply chain
Define the customer journey
Competitive advantage
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Lawyers – why become an ABS?
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Allow “internal” nonlawyer managers into ownership
Enter into business with “external” nonlawyers - clients
Realise value of capital shares
Receive capital for growth
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Investment for growth
• Acquire firms, teams or people
• Market positioning/economies of scale
• Invest in infrastructure eg, IT or premises
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Why most law firms aren’t attractive
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Traditional partnership model not a corporate one
Firms won’t tolerate external direction
Resistance to change
Risk averse
High profile failures
Too much baggage
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What law firms are attractive
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Scalable and repeat business – a low IP rating
Key personnel not important to servicing the work
Corporate structure and/or small management team
Solid client base & long term relationships/contracts
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Example ABS models
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Co-Op & Endsleigh
DAS & Capita
IM
Slater & Gordon
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The perfect storm
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Economic conditions
Public funding cuts
Restricted traditional funding
Fragmented market
Massive inefficiencies
Impact of IT & commoditisation
Outsourcing
Jackson
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What does all of this mean?
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A market ripe for new entrants
Greater focus on partnership opportunities
Greater reliance upon IT & commoditisation
Massive consolidation at all levels
Greater competition
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Pannone take on LSA opportunities
• Creation of Pannone Affinity Solutions
• Connect2Law
• Outsourcing – LPO & BPO
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Pannone Affinity Solutions
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Complete range of consumer/commercial legal services
Tailored & flexible service managed within a distinct arm
Volume & bespoke
UK wide face to face coverage
Contact centre & legal helpline function
Focus on service delivered as well as work done
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Connect2Law
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The UK’s leading legal referral and support network
2,270 law firm members
Referral network
Support network
Hub franchise
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Outsourcing
• Connect2Law
• BPO provider
• LPO provider
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What’s the outcome?
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New entrants in ABS form
More white labelled solutions/partnerships
Acquisition of law firms
Investment in mid tier firms operating volume
Owner manager and work introducer ABS’s
Legal franchises & networks
MDP’s
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How will the LSA affect you?
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Know your market and the impact of these changes
Absolute strategic objectives
What do you need to meet your objectives
Only then consider an ABS
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EXCELLENCE AND ENERGY
IN ALL THAT WE DO
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