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The Legal Services Act – what does it all mean?Charles Layfield14 July 2011

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A decade of ignorance

• 2001 OFT report on competition in the professions

• 2004 Clementi report• 2005 DCA White Paper – Future of Legal Services• 2007 Legal Services Act• 2011 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

• Conveyancing• Probate• Notarial• Commissioner for oath functions• Rights to conduct litigation• Rights of audience• Will writing?

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Requirements of an ABS

• 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?

• 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?

• 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

• 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

• 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

• Co-Op & Endsleigh• DAS & Capita• IM • Slater & Gordon

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The perfect storm

• 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?

• 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

• 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

• 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?

• 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?

• 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