This article was first featured in Accountancy Age.
Tax and regulatory issues are among the biggest issues facing law firms considering conversion to alternative business structures (ABSs).
Opening up the ownership structures of firms that provide legal advice, including the injection of private equity, is of great importance to accountancy firms. Accounting practices could find themselves the subject of takeover by lawyers – conversely practices could look to provide legal services.
But the survey of 100 law firms, by Fox Williams, found some resistance to change.
Some 41% said they would need tax advice to help them structure an ABS – also known as a multi-disciplinary practice (MDP) – while more than a third would need help on the consequences of the move in a regulatory context.
Half of the firms said that partners’ resistance to change would serve as a barrier, while loss of control of the firm was a concern for 62% of respondents.
However, 54% said that gaining access to private equity was either “compelling” or “very compelling”.
The majority (70%) identified improving the firm’s cash flow as either “important” or “very important” when considering an ABS conversion.
“The [Legal Services Act] is an enabler and is about new models for the provision of legal services not yet contemplated. It is very early days and we can expect a lot more innovation in the coming months and years,” said Tina Williams, senior partner at Fox Williams and a partnership law expert.
The ICAEW is currently working towards becoming an approved regulator, a status that will enable it to license firms wanting to structure themselves as an ABS.