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Legal Services Act index: an evolving insight into emerging trends

Overview

In political circles there is a story, apocryphal perhaps, relating to New Labour policy-making before the 1997 election.

If the story is to be believed, faced with a rising tide of complaints against solicitors, the soon-to-be New Labour government issued an ultimatum to the legal profession: “Get your own house in order or we will do it for you.”

In its July 2003 report, ‘Competition and Regulation in the Legal Services Market’, the Department for Constitutional Affairs concluded that the regulatory framework for the provision of legal services in England and Wales was ‘outdated, inflexible, over-complex and insufficiently accountable or transparent’.

Subsequently, on 24 July 2003, the Secretary of State for Constitutional Affairs appointed Sir David Clementi to conduct an independent review, which, among other things, was “to consider what regulatory framework would best promote competition, innovation and the public and consumer interest in an efficient, effective and independent legal sector”.

After careful consultation, Sir David Clementi’s final report paved the way for the enactment of the Legal Services Act 2007. The Legal Services Act has two primary aims. First, to simplify and improve the regulation of legal service provision in England and Wales. Second, to create a framework within which legal services may be provided in new ways.

Many of the regulatory changes are now being implemented and are outside the scope of our report. In this document, we explore the diversity of views surrounding the way in which legal services will be provided once alternative business structures (ABSs) enter the marketplace on 6 October 2011. ABSs, which permit non-lawyer ownership of businesses providing legal services, will then begin to operate. Some commentators predict that this will sound the death knell for traditional high street law firms. Others feel that consumers will reject a ‘corporatised’ approach to the provision of legal services in circumstances where a personal touch is required.

There is also considerable debate as to the impact of external equity on law firms having an international network of offices, on law firms whose clients are primarily limited companies, and on the Bar.

In this report, we explore all of these dimensions. In doing so, we draw not only on Baker Tilly’s long experience of advising the legal profession, but also on the insights and experience of lawyers, investors and regulators both in the UK and overseas.

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