A new market report from the Law Society looking into the supply side of the legal services market has identified alternative business structures (ABSs) as a key driver of change in the sector.
The report examined different groups of providers, including the top 200 law firms, small and mid-sized businesses, advocates and in-house lawyers, and the way they responded to changes in the legal services market.
Of the 200 biggest firms, only 7% saw ABS status as a growth opportunity. Their lack of interest was attributed to several factors, such as unwillingness to cede ownership control and their presence in jurisdictions where ABSs are not permitted, Legal Futures reveals.
However, newly licensed ABSs have the potential to shuffle the ranks of the leading players, the Law Society's report suggests. ABSs, the liberalisation of the legal sector and new business models such as virtual companies all play a role in creating an environment that puts pressure on small and mid-sized firms, potentially leading to mergers and buyouts and closure of some firms.
The report notes that a small number of successful ABSs could radically change the supply of typical high-street services, resulting in a significant reduction in the number of solicitor firms.
Meanwhile, the advent of ABSs continues with telecoms giant BT being among the latest non-legal global brands to enter the legal services market. The company said earlier this month that it had been awarded an ABS licence from the Solicitors Regulation Authority (SRA) to launch BT Law Ltd. BT Law, which incorporates existing claims management firm BT Claims, will initially provide legal services in the motor claims market and later expand into other areas of law. The SRA has now licensed over 100 ABSs and this number is set to grow, providing more choice to customers. BT joins the group of leading non-legal companies, like Saga, Co-op, Eddie Stobart and Direct Line, which have unveiled plans or have already set foot in the legal services market since the launch of the ABS regime.
Red Square London, a family office helping wealthy businessmen from Russia and Eastern Europe relocate to London, has also won an ABS licence this month, adding legal services to its existing portfolio of business and personal services.