Industry shake-up no threat to us, say law firms

Following a change to the law, supermarkets, banks and other high street retailers can now offer legal services to customers.

Yorkshire’s top legal firms believe that it is small high street firms that will suffer from the competition rather than big name players.

Paul Cotton, senior office partner of Eversheds’ Leeds office, said: “The biggest impact initially is going to be felt by high street firms, those offering services such as personal injury advice and will writing.

“We are of the opinion that, initially at least, it is unlikely to have an impact on us as a firm, or to a large extent other business to business law firms.

“Our clients come to us because of our reputation in the market for providing quality legal advice. That is unlikely to be challenged by new entrants to the market.”

Sarah Day, managing partner of DLA Piper in Leeds, agreed: “The Legal Services Act will have most impact initially on the consumer legal services market, as it enables businesses such as supermarkets to expand the offering they can provide to retail customers out to legal services, in the same way as they have done for insurance.”

Both Eversheds and DLA Piper said the new Act will raise the prospect of a big law firm floating on the stock exchange.

Mr Cotton said: “Law firms will be able to raise fresh capital by floating on the stock market or forming different business structures. Firms may also look to sell an equity stake to a venture capitalist for cash to finance expansion or make new hires.”

Ms Day said the new Act will enable firms to offer the equivalent of share incentives as part of their remuneration packages to staff.

But both law firms said they were unlikely to float as a result.

Ms Day said: “The prospect of a major firm doing an initial public offering was always thought to be remote, but who knows? And no, DLA Piper is not planning on one!”

Mr Cotton said: “Whereas some firms will look for opportunities to raise finance either selling equity stakes or floating on the stock market, Eversheds’ model operates lower overheads and as a firm, we do not require large injections of private capital.”

Victoria Davey, partner and head of the risk and compliance department at Gordons LLP, said: “Many may question the independence of legal advice given by companies with external investors.

“The external, non-lawyer investment into law firms will take some time to fully develop but will inevitably lead to a very different legal landscape,” she added.

Partner Philip Way at Mills & Reeve said: “The reality of the introduction of the new Legal Services Act is that, certainly at the start, we’re going to see a barrage of paralegals and unqualified solicitors doing volume work, such as conveyancing and straight forward wills.

“However, there will always be a need for bespoke specialist advice which can be offered by experienced lawyers, barristers and solicitors from established law firms.

“It’s not going to be possible to settle the complexities of a multi-million pound divorce case over the counter at Tesco.”

Despite frequently being dubbed ‘Tesco Law’, the supermarket giant has said it has “no current plans to offer legal services”.

Martin Scott, head of construction and engineering at Walker Morris, said the new Act will have little impact on his firm.

“Whilst for volume legal services the new Act clearly has its place we think it is unlikely to effect the specialist work which Walker Morris undertakes,” he said.

“As a firm we think independent legal advice remains important to both business and individuals and our lawyers will continue to provide that advice whatever statutory framework is imposed on the profession by the Government.”

Corporate partner Steven Glover, at Squire, Sanders & Dempsey, said: “Over time it’s inevitable that the way that legal services will be delivered will change.

“Whether you regard the changes as progress or not, there’s little point in standing in the way of it. Arguing that no change is best ignores the fact that the world has moved on and in almost every other sector there have been fundamental changes to the provision of goods and services as technology and people’s expectations have developed.

“It’s not all doom and gloom but as with so many other markets you can either be one of the best or one of the lowest cost – anywhere in between is likely to be increasingly tough.”

Co-op wants to join revolution

The Co-operative has said it is interested in offering legal services to its customers, adding it is seeking to get the necessary registration as soon as possible.

Jonathan Gulliford, sales and marketing director for the Co-operative Legal Services, said most of its customers are not used to dealing with solicitors, adding it is “not something they want to be doing and on the whole they don’t like doing it”.

“We want to get in to help our members and to do the work for them,” he said.

He said the Co-op will tackle the issues that many members of the public have with the legal profession.

Justice minister Jonathan Djanogly added: “This is a landmark day for the UK legal industry. Our legal services are already rated among the best in the world, used by millions of people around the globe as well as in the UK, and these changes will set them up to move to new heights.”