Alternative Business Structures: A Brave New Legal Services World?

Ever since the concept of the Alternative Business Structure (ABS) was introduced by the Legal Services Act 2007, opinions within the legal community have been sharply divided. Some see them as revolutionising the legal market and the way in which legal services are delivered, introducing big brands such as the Co-Op, Direct Line and the AA to the market for the first time. Reactions to such predictions are predictably mixed; the Law Society has conducted an advertising campaign extolling the virtues of the traditional high street solicitors practice; Quality Solicitors, a network of independent solicitors, has recently conducted a viral advertising campaign contrasting “Faceless legal advice from supermarkets” with their own solicitors who “know their onions”. Recent research
by The College of Law suggests that only 1% of law students would choose to work for an ABS over a traditional law firm. For others change has to be positive, and the introduction of greater competition and choice to the market can only be a good thing, with consumers being the big winners.
It is certain that some big players will enter the market; indeed, the Co-Op has been in the legal services market since 2006 and already has an ABS licence; others will certainly follow. However, many ABS applications have come from existing law firms. So, does the introduction of the ABS really threaten traditional law firms or will in fact the greatest impact be to allow those traditional firms who have the foresight and ability to grasp the opportunities provided to strengthen their financial position and provide better and more competitive services to clients. What then will be the response of the traditional legal services providers to the introduction of the ABS? What are their views? What do they perceive to be the benefits and risks? Is it the attraction of multi-disciplinary partnerships or the ability to secure external investment that draws firms to the ABS model? Is the ABS likely to replace the partnership as the principal practice structure for law firms? And what will be the knock-on effect of these changes on those firms that choose not to convert to the ABS structure? Will the result be increased pressure for consolidation in the market, leading in fact to less choice for consumers rather than more?
This survey will attempt to answer these questions by analysing the limited evidence so far from the applications received by the Solicitors Regulation Authority, and the relatively small number of licenses issued to date. It will in particular consider the views of local and regional law firms, collected by questionnaire and interview, some that have either already applied to convert or are actively considering doing so, looking at their motivations, hopes and fears. How do they view the brave new legal services world?