Firms keen on taking up Clementi Report reforms

Fifty per cent of law firms are considering external funding, while more than half are considering adopting alternative business structures (ABSs), a new survey has revealed.

The report by Clearwater Corporate Finance, which surveyed 30 law firms across the country, revealed that the firms are optimistic about the reforms proposed in the Clementi review on the regulation of legal services.

Ninety-two per cent of surveyed law firms welcomed the introduction of multidisciplinary practices (MDPs). These would allow legal services to be supplied alongside other professions, and 69 per cent of the firms surveyed considered accountants to be the most suitable partners, while only 19 per cent thought that a tie-up with the banking profession would be suitable. Other suggested potential partners included tax planning and IP agents.

Eighty-five per cent of firms questioned had discussed the issue of MDPs and ABSs at board level, while 56 per cent were considering adopting an ABS. Firms that were open to external funding cited financing acquisitions, investment in new service lines, taking money out or selling the business as reasons.

Clearwater director Gary Hyem said: "It's a positive sign that half the firms surveyed were considering raising finance, with the majority planning to use it to fund acquisitions, new service lines or offices."

Sixty per cent of respondents said the proposed changes highlighted in the Clementi Report would affect their approach to new partners entering the business.

Some predicted that partners would have to be more business-orientated and would have to pay a higher price for entry into the partnership, while others predicted that the partnership concept could be eroded, as there would be a decreasing need to rely on partners' equity.