Analysis: Legal Market braced for onslaught of ABSs

When and where?

2012 will be the year of the high-street friendly ABS, and the players are already jostling for position.

The news that the SRA had been given approval to regulate ABSs in December set the ball rolling for the first applications from January (TheLawyer.com, 1 December 2011).

The SRA hoped it would have approval in time for the LSA coming into force on 6 October 2011, but the process was delayed because the Government had not given the go-ahead to the SRA’s proposed process for disciplining ABSs.

Who’s converting?

A string of organisations have expressed interest in transforming into ABSs, with the SRA receiving more than 92 applications for ABS approval.

DLA Piper’s purchase of a ­minority stake in prospective ABS LawVest scotched the usual claim that ABSs have no relevance to big City law firms (TheLawyer.com, 28 October 2011).

LawVest is a holding company set up to exploit the significant opportunities that are being

created by the structural, regulatory and commercial changes in the legal market.

The investment gives DLA Piper a foothold in the sector, with the firm’s co-chief executive officer Nigel Knowles becoming non-­executive chairman of the company. LawVest is planning to launch an ABS aimed at small to medium-sized enterprises this year.

The Co-operative, meanwhile,  hired two family law partners from legal aid firm TV Edwards in November as a precursor to Co-operative Legal Services’ conversion to an ABS (TheLawyer.com, 2 November 2011). Since then it has ramped up recruitment ahead of ABS conversion, aiming to fill 150 positions across the business (The Lawyer, 12 January).

Last April, Irwin Mitchell also declared its ABS intentions, announcing plans to use the £50m it expects to amass on converting to go head-to-head with mid-tier ­corporate firms (The Lawyer, 25 April 2011).

Irwin Mitchell’s conversion to an ABS was anticipated by the ­profession since the Legal Services Act (LSA) was first mooted, after the firm’s senior partner Michael Napier was heavily involved in shaping the LSA legislation and pushing it through parliament. A raft of firms have followed suit or are already attending the party.

QualitySolicitors, a national ­network of law firms, could have kicked off pre-LSA, but has been given further firepower by the new regulatory mood. It is already

well-established through a growing web of firms that have adopted the ­network’s branding and standards. It has 110 firms in 220 ­locations, plus stands in large branches of WHSmith, and is ­growing fast ­following private ­equity investment. It aims to be present in 1,000 locations by the end of this year.

Two-year-old Lawyers2You, the consumer brand of Birmingham law firm Blakemores, has some 50 mobile stands in shopping and ­travel centres across the Midlands. It plans to have a network of 150 ­independent law firms by 2014 and to expand globally.

In November, virtual law firm Everyman Legal, which counts some senior commercial solicitors among its ranks and whose target market is entrepreneurs, announced its intention to seek admission to junior stock exchange Sharemark. The equity it hopes to raise will allow it to build the ­framework to support a rapid ­

scale-up of operations.

In the last month alone, the liberalisation of legal firms’ ownership structures has prompted a series of headline-grabbing moves in the sector, the latest being private equity house Duke Street taking a 50 per cent stake in insurance claims ­company Parabis Group. Prior to that deal AIM-listed Quindell Group acquired Silverbeck Rymer while Australia’s Slater & Gordon acquired Russell Jones & Walker.