This article was written for and first featured in South East Business.
For centuries solicitors have had the benefit of a closed shop ownership system. Firms could provide solicitor legal services, for example litigation and real estate work, only if they were owned by solicitors.
Now firms can provide solicitor legal services without needing to be owned by solicitors provided they are licensed to do so. The idea behind the rule change is that opening up the legal sector will result in new business models which will deliver legal services at cheaper cost. At the end of March the principal regulator of law firms announced that it had granted licences to three firms to operate as an ABS (alternative business structure). Of the three firms, two were small local firms, including Kent firm Lawbridge Solicitors and the third was Co-op Legal Services. The regulator is working on around 60 other applications for authorisation as an ABS. These include a number of law firms who have been purchased for sums of up to £50 million, subject to the regulator’s consent. The buyers have included other law firms, private equity investors and groups which provide associated services, such as claims management and consultancy. Doug Preece, partner at law firm Fox Williams LLP commented, “Most of the activity is at the commodity end of the market with firms specialising in personal injury litigation and conveyancing. This continues a trend which we saw before the rule change came in where we acted on a number of sales of personal injury litigation firms for significant sums.”