The Law Society Gazette reports that 30% of UK solicitor firms have already talked to potential investors about investing in their firms come October. Some additional stats from the article:
"65% said they were ‘comfortable securing external investment from a non-legal investor""Some 65% of solicitors said they would consider doing work with a non-legal brand such as a supermarket …"
I have had my eye on the Legal Services Act (LSA) for some time now. Allowing law firms to take on capital investments is a very powerful idea. It’s challenging for any business to prosper, let alone survive in a competitive market without access to capital. Law firms have been bound by ethical rules that haven’t allow outside, non-lawyer investment in their firms. This limits their capital raising ability to whatever the lawyers could shoulder personally. With the LSA, law firms can make large scale investments in their businesses, upping the ante in order to remain competitive. This article predicts that firms will respond proactively to a more open capital market. Personally, I think this is a very positive step and a smart strategy by the UK to dominate the legal industry on a global scale.
Since US firms are not able to access this level of capital, they will be at a distinct disadvantage in the global market. Their UK counter-part firms can now start investing in strategic technology and more professional marketing and sales organizations in a much more aggressive way.
The outcome of all this is yet-to-be-seen. My 2 cents: the market for legal services IS becoming a fully competitive market. Market players with access to capital will absolutely have an advantage in the market. US firms who compete internationally would be wise to keep a close eye on this new approach as it evolves.