Andrew Nulty, the senior partner of top 100 debutant Avalon Solicitors, is on record as saying his ambition is to float his firm on AIM. Similarly, Taylor Wessing's managing partner Michael Frawley revealed that his firm is already considering various fundraising options available if and when the Legal Services Bill becomes law. These include a private equity sale.

Perhaps from as early as next year a UK law firm may be free to list its shares on the stock exchange. Or sell off a portion of its business to a private equity house.

The post-Clementi, post-Legal Services Bill world is approaching fast, and among a growing group of investment bankers, brokers and more forward-thinking lawyers the question is changing rapidly from 'could a firm float?' to 'which will be the first?'.

"The key thing is diversification of revenue sources," says Close Brothers' Mark Barrow, who heads its private equity coverage group. "If you have a substantial single client or concentration of clients in a given area, that will probably be less attractive than a firm with a very diversified one. You'd look for about 10 different revenue streams on different cycles." Another banker claims that there are only two things that the market will care about when valuing a law firm, "market position and growth potential".

According to another, the track record will be fundamental. "People will want to analyse what happens in a downturn," he says. "How quickly can you fire people or cut costs to keep profit up? How sustainable is the business?" In fact, all of the above will be key factors in determining the value of a law firm if and when it comes to market. Valuing any business is a notoriously tricky game, but putting a price on the first law firm to float will literally be unprecedented.

Former Panmure Gordon & Co banker Julian Hirst set out his stall as an advocate of this emerging market last year when he wrote to all of the top 100 managing partners to assess their interest in a deal. He believes he has identified the kind of firm that is most likely to float. "There are probably two or three looking at it seriously, maybe five," he says. "The likelihood is that two will go some time next year."

It is unlikely that any of the UK's largest or most profitable firms would want a deal. Simply put, they do not need to. As Alasdair Robinson, a director at UK independent investment bank Noble, puts it: "They have enough capital to satisfy expansion requirements." In addition, the multijurisdictional nature of many of the top firms would add another layer of complication to an already complex transaction.

So what are the clues to look for when trying to pinpoint the firm that will blaze this trail? A UK-only, or predominantly UK-based, firm that may be seeking funds for overseas expansion is a better bet. According to Hirst, it is likely to be one with a turnover of at least £50m and it would be focused on high-margin corporate and commercial matters.

However, others exploring this market believe that a more likely candidate would be a provider of bulk services, such as conveyancing or personal injury. In addition, a firm that has already converted to limited-liability partnership (LLP) status could, at least in theory, be further down the road to a deal in terms of the rigour it has already introduced to its financial reporting.

The fact that firms will be free to float soon does not, of course, answer a more fundamental question: why? And more personally, why would an individual partner want to? An IPO would create enormous upheaval in any firm looking to raise funds in this way and would expose a bunch of naturally conservative lawyers to the glare of the public gaze. There would need to be a fairly compelling reason to start this ball rolling.

Money is, of course, the answer; but the crucial point is what the firm plans to do with the extra funds it raises by going to market. Is the idea to give the current partners the funds and freedom to go off and buy a bigger yacht, or is it looking longer term? As Giles Murphy of Smith & Williamson puts it: "This would be a one-off payment that won't be repeated. A partner joining the equity the following year wouldn't benefit."

While the strategy of raising funds for recruitment or expansion is the most likely primary reason for a float, there is no doubt that the upside for senior lawyers is the potential it would create to extract some of the value of the business for themselves in the form of shares. And the growth of the UK legal market over the past 10 years shows that, over time, that value could be significant.

"Say you're a partner getting close to retirement. With shares in your firm you have something potentially of real value," argues Hirst. "Right now you have nothing. Gone are the days when an old partner is bought out by a new partner. When a partner retires, that's it - no more salaries, no more bonuses.

"So the people who've loved this project and the people who are going to be driving it are those who are 55-plus. Because right now they're five years from retiring, and when they retire the gravy train comes to an end."

Younger lawyers will have a different motivation. For them it will be the growth of the long-term capital value of the business. "But they'll still be getting their salaries and bonuses along the way," says Hirst.

There would also be the chance to offer unprecedented incentives to non-fee-earning staff. As Denton Wilde Sapte managing partner Howard Morris puts it: "I'd like to see whether the model would allow the equity to run deeper. We can't give staff share options. We can't reward those people who show loyalty to the firm, which would be quite nice."

Morris, however, remains unconvinced that there is much of a market waiting to fly. "I don't see a commercial case, as law firms don't need a lot of capital," he says.

Anecdotal evidence suggests that, although he may be right, there have at least been conversations between partners at most firms on this subject over the past few months. But it should also be stressed that, for the vast majority, it remains a very low priority. One managing partner at a top 10 firm says he has not spoken to anybody at all about the subject.

Other managing partners admit that they had discussed it, but very briefly, before moving on to other business. Halliwells senior partner Alec Craig says his firm is "reviewing the options", but also makes it clear that this is not in any way in preparation for a deal.

Overall there is a sense that most firms have taken the looming changes on board but have not yet made any significant steps towards doing a deal. According to Hirst, however, there are at least a handful of firms that are already at the planning stage.

He claims that there is at least one that has already drawn up its business plan for an IPO. The plan considers the implications of the deal and what it would mean to compensation.

"Then they'll be coming to a view on an IPO," says Hirst. "But they haven't come to a decision to give it the green light yet. It all comes down to whether it's something they feel they can sell to the partnership, because to do it you'd need to dissolve it [the partnership]. You need a strong management to pull this off. The law is quite a conservative industry and people resist change." The question is, for how long?

Until then, everything remains hypothetical. Which is why in this year's annual report, The Lawyer editorial team has picked its bets for the firms to invest in or those to drop like an online gambler.