Vikesh Navsaria
Posted:
14 Oct, 2010

There will always come a time when something good must come to an end. Is this to be the same for the legal profession as we know it? The Legal Services Act 2007, voted for by the Labour government, is the vehicle they had planned to give the legal industry its biggest shake-up in nearly 800 years.

The new act will enable alternative business structures (ABSs) to enter the legal industry. In effect, this paves the way for non-legal institutes to offer legal advice to the consumer. Naturally, this development in the legal system sparked the interest of common household brands such as Tesco, AA, Co-Operative and various high street banks - all looking to cash in on the opportunity to expand their already immense customer base.

So what then does this mean for the existing solicitors, particularly the smaller high street firms?

More importantly, what does it spell for the consumer? The intention behind the law is to present consumers with a greater choice of legal service providers, potentially resulting in increased value for money as the bigger corporations seek to initiate a price war, knowing full well they have the financial backing to do so.

The Act also allows for non-lawyers to purchase shares in a law firm of up to 25%, potentially resulting in restructuring and even the issuing of shares and merging with non-law firms to inject capital investment. This said all may not be as positive as first perceived. The larger organisations that are now entitled to enter the legal market may generate an industry dominated by large firms more focused on revenue and returns than on the customer service that they provide.

A further aspect of the Act is that these new competitors being ABSs will be un-regulated. Without a regulatory body to supervise their activity, the level of legal service provided to the customer by existing law firms will almost certainly not be matched. This decrease in the level of service provided could result in confusion and annoyance to the customer for whom the Act is intended to benefit.

While it seems the long-standing corporate/commercial firms in the heart of London's business district may well go unaffected by this change, what does it spell for the UK's high-street firms? Immediately it begs the question; how can these small firms compete with big consumer brands?

The focus for such firms should be on assuring clients that as a local firm they are there to service the local community. Not only that, the sheer fact that existing law firms must adhere to the strict regulations of the Solicitors Regulation Authority surely indicates that the level of service will consistently be of a high standard. Where some people may want a do-it-yourself divorce for perhaps as little as £7.49, others may wish to seek the assurance of going to a long-standing legal practice dedicated to providing such services with the added bonus of a face-to-face conversation.

Good news may be on the horizon for these high street firms as although the Act has been passed under Labour's rule, it is for the Conservative/Liberal Democrat coalition to implement it. Unsurprisingly, those in charge of implementing this new law are of differing opinions to those who voted for it.

Where it may be too late to do a U-turn on the law, it will not prevent the new government from restricting the use of it by significantly amending the way in which ABSs will operate. In the pipeline there seems to be a strict test that will have to be met by those ABSs attempting to enter the legal market, which will take into account the geographical area in which an ABS is to set-up, the type of services to be provided and the impact it would have on existing providers.

In the event that the domination of the legal market by these ABSs could not be thwarted there are already defence mechanisms in place by high street firms as a collective. One of which is the formation of the QualitySolicitors.com brand, which is a collection of law firms, selected by the public for their high standard of customer service, all of which operate under the QualitySolicitors umbrella and at the same time having the opportunity to preserve their own identity and their status within the community as a long-standing law firm.

The implementation of this law benefits the consumer more than it does the existing members of the legal industry. The addition of these ABSs to the industry will no doubt make for a more robust marketplace offering a wider choice of legal service provider, a wider range of costs and with that unfortunately, a differing level of service.