This article was first featured in New Law Journal.
Commercial law firms have expressed a lack of confidence in the Solicitors Regulation Authority’s ability to process alternative business structures (ABSs).
Nearly half (49%) of 100 commercial firms responding to research on the changing legal market, commissioned by law firm Fox Williams and undertaken by legal research company Jures, said they were “not confident” in the SRA’s ability to successfully manage the ABS application process.
Seven ABSs have so far been licensed by the SRA since the January launch—delayed by three months from its original October 2011 due date.
However, the research, ABSolutely fabulous—a study of ABS, indicates this low-profile start should not be dismissed. Four out of 10 commercial firms have changed their management strategy in response to the Legal Services Act, which permits ABSs, and 14% of the firms have already changed their partnership structure.
More than half of the respondents described accessing private equity or other third party investment as either a “compelling” or “very compelling” reason for ABS conversion.
On the other hand, “loss of control” and resistance from partners were identified as the biggest barriers to conversion.
Tina Williams, senior partner at Fox Williams, says: “The possibility of using the ABS model as an opportunity to refinance firms to enable growth or better to facilitate survival in a newly competitive environment is clear to see from our research.”