Legal Services Across the Pond
Across the pond, the legal industry is addressing some of the same issues as US firms but with their own distinctive twist. Facing attrition rates similar to those in the US, UK law firms are re-jiggering what it means to be a partner and whether lawyers even need to be one in order to stay over the long haul. One-third of the UK 100 law firms have over the last few years introduced non-partner career tracks, based on associate feedback that partnership and its lifestyle has lost its allure.
On the legislative front, an NFO report in March 2001 on "Competition in Professions" recommended that unjustified restrictions on competition be removed. The government's report in response on competition and regulation in the legal services market concluded that "the current framework is out-dated, inflexible, over-complex and insufficiently accountable or transparent..."
Sir David Clementi, Chairman of Prudential pfc, one of Britain's largest insurance companies, was asked to do a wide-ranging independent review of the regulation of legal services in England and Wales, which is now known as the Clementi Report, was presented in December 2004 and was approved by British Prime Minister Tony Blair's government in October 2005. It recommended allowing nonlawyers to own, manage, and finance law firms for greater access to management expertise and capital markets.
The associated Legal Services Bill was introduced to Parliament on November 23, 2006 and is still pending. It proposes three key changes:
- creation of a new oversight regulator, the Legal Services board;
- a new Office for Legal Complaints; and
- new models of practice through alternative business structures.
Surveys of UK law firms find them staunchly in favor of many of the proposed provisions. Ninety-two percent of surveyed law firms welcomed the introduction of multidisciplinary practices (MDPs), and found the most suitable prospective partners to be accountants (69 %), banks (19 %) and tax planners, IP agents and others. .
Fifty percent of UK law firms are considering external funding, while more than half are considering adopting alternative business structures (ABSs). Eighty-five per cent of firms questioned had discussed the issue of MDPs and ABSs at board level, while 56% were considering adopting an ABS.
The idea of multi-disciplinary practices has been bandied around in the US for years, and the growth of global law firms, and the prospect of competing with UK multi-disciplinary firms, may again suggest that model as a possible development of the future. What is interesting is the extent of support that UK firms are giving the idea.
Stay tuned.
