The Legal Services Act (LSA) has always been associated with personal injury (PI) powerhouses Irwin Mitchell and Russell Jones & Walker, both of which have big post-LSA ambitions.
But smaller firms are also looking for new ways to access the consumer market, and a number of online services are emerging with the specific aim of giving these ;firms ;stronger distribution channels.
Firms are being told by potential investors that the implementation of the LSA will see high street brands suck up the work that currently keeps them afloat.
According ;to ;Legal Services Policy Institute director Professor Stephen Mayson, “the reforms are going to be cataclysmic”. He adds: “The AA and HBOS are doing legal work on a massive scale. There aren’t that many law firms around that can compete. Are we all going to roll over and think about consolidation?
“The one thing that makes an industry vulnerable is the incumbents not changing. Thinking like lawyers could spell the end.”
In contrast, the consumer legal services sector is looking for ways to manage the recession while retaining the strength to compete with the high street brands following the implementation of the LSA.
Online legal alliance QualitySolicitors.com charges firms an annual fee to sit on a panel that enables them to pool their resources with similar firms across the country. The membership fee goes towards the cost of running the website, marketing and overheads. “Specifically there are no ‘per case’ charges whatsoever,” the company says.
The alliance is the brainchild of barrister Craig Holt and is supported by Michael Gradon, a former Slaughter and May solicitor and one-time head of legal and commercial at P&O Group.
Its website promises that cases – be they PI or employment – are matched to the most relevant lawyer on the panel and that those lawyers have been vetted by the company.
Gradon says: “Following on from scandals like the Beresfords’ mining compensation cases, the public are more alert than ever to look for a trusted brand. High street firms can’t compete from a marketing and brand development perspective with the bigger companies looking to enter the legal market, but by working together they can be a force to be reckoned with.”
Holt ;says ;Quality Solicitors.com ;began marketing at the end of last year after it emerged that disgraced solicitor Jim Beresford was set to launch a legal supermarket. Since then 70 firms have joined the alliance.
“We’re likely to launch ahead of schedule because of the demand,” Holt tells The Lawyer. “We aim to get 100 firms involved and then we’ll increase the marketing campaign. Firms will be monitored closely through customer feedback – it’s all about service delivery.
We want the brand to be firmly established before the LSA comes into force.”
Holt envisages that eventually there will be 500 firms signed up to the alliance, giving it the economies of scale to compete with the likes of HBOS and the AA.
Whereas ;QualitySolicitors.com aims to give firms a distribution base, another model has emerged that will effectively allow firms to trade cases. Your Solicitor.co.uk has been trading for two months and is owned by a Dubai-based company.
In the UK it will charge firms a sign-up fee and, depending on how much they pay, they will be assigned a set number of cases. Firms will also be able to feed cases into the online platform and be given a discount in return.
The company is run by legal expenses insurer Composite Assistance. Where appropriate, it will provide after-the-event policies to consumers using the service and will be responsible for vetting cases before they are passed to solicitors.
“Composite takes the responsibility for producing quality leads,” explains managing director John Mullin. “It’s an opportunity for us to get some good legal expenses work and for an organisation to create an opportunity on the internet that they wouldn’t know about themselves.”
The company is still in pilot mode after launching last December. So far 15 firms have signed up, but with the company targeting a range of consumer services, including industrial disease, care home costs, family, conveyancing and PI there is room for many more.
“There will be significant cross-selling opportunities to extend the brand across the insurance and financial services sector,” the company’s brochure promises. “There are opportunities to increase the policyholder base by selling motor insurance renewals to existing legal insurance customers.
“Solicitors will benefit because it will increase the number ;of ;customers reporting legal claims to the Your Solicitor brand.”
This is likely to create a stir across the profession. As Holt says, trading cases is “extremely distasteful”.
Nevertheless, with referral fees climbing to £900 a case, it offers a lifeline by promising to cut overheads while generating leads.
New entrants to the legal sector will want larger returns for their investments and that will force firms to look for innovative ways to get to clients. Profit margins in the volume market are already under pressure.
The ;danger ;is ;that, without proper regulation, marketing and selling cases is a dangerous proposition and could result in another Beresfords-type scandal.
It is fortunate, then, that the LSA has taken so long to come to fruition and that the Law Society has instigated a review of regulation to investigate whether private legal services should be regulated separately from commercial services.
The transition from law firm model to commercial business venture is gathering momentum. It may not be to everyone’s taste, but public perception of the legal profession will soon be formed by the legal supermarket brands that are being established now.