The likely impact of the Legal Services Act (LSA) and the possibility of a US equivalent was high on the agenda at the Legal Leaders Forum earlier this month (3-4 April).
The two-day San Francisco forum was organised jointly by Orrick Herrington & Sutcliffe and consultancy firm Hildebrandt. The event brought together CEOs and managing partners from US and UK firms to discuss key issues in the legal market.
UK firms present included DLA Piper, whose joint CEO Nigel Knowles joined Travers Smith managing partner Chris Carroll on a panel discussion on the LSA with Dechert managing partner Bart Winokur.
Hildebrandt chairman Brad Hildebrandt says: "I think most US lawyers are interested in knowing exactly how the act will really impact law firms in the UK. From the panel discussion it seems that the opportunities of external capital to be invested is not really appealing for larger firms."
Hildebrandt adds that while smaller firms with aggressive growth aspirations may benefit from an LSA equivalent in the US, the regulatory regime would place major constraints on its development.
"Each state would be required to approve any such act. Not only would this take an extremely long time, but it would be quite unlikely to be approved in all states," he says.
The LSA has sparked debate in the UK about the challenges and benefits of firms issuing IPOs and private equity houses and financial institutions investing directly into law firms.
Last month private equity fund Lyceum Capital set up a dedicated committee to explore opportunities of investment into law firms when the LSA comes into effect in 2011.
"It's understandable that US lawyers don't really see the use of the Legal Services Act," says Carroll. "There's the argument that it's more suitable for firms with merger aspirations, but there is the point that there have been many law firm mergers in the past without this in place.