Why would a law firm choose to convert to an ABS – and is it worth it?
Buying legal services should be as easy as buying a tin of baked beans, so the market was told in October 2011 when the Legal Services Act 2007 came to life and alternative business structures (ABSs) reared their newly-born heads.
Years later, many are left asking which tin of beans we might be buying, who is buying it, and most importantly, if it’s all worth it.
Getting non-lawyers onto the management boards seems a key trigger for law firms to convert. One of the UK’s biggest personal injury firms, for example, Thompsons Solicitors, converted into an ABS last December so that finance director Andrew Lyburn could become an LLP member.
When we spoke to the firm three months later it maintained that converting has been no big deal, telling Lawyer 2B’s sister title The Lawyer that it was “such a minor thing” that there was not all that much to say.
For others an ABS licence is the line in the sand between it and lots of cash. Midlands firm Knights, for example, was given the all-clear to convert into an ABS late last year, a move that gave the go-ahead to a capital injection from Dragons’ Den star James Caan.
“I can’t say there has been any negatives from obtaining the ABS approval,” says Knights managing partner David Beech. “We needed to do it [convert to an ABS] to attract investment, and it’s meant that Caan and other investors have been able to sit on our board. I’m interested to see why people would apply for an ABS licence other than to get non-lawyers on their management board.”
Then there’s the march from big names outside of the legal sector, notably the Co-operative, Eddie Stobart, and over-50s group Saga.
“There’s very few industries where you don’t know the price of a product until the end of using it,” says Saga’s director of business development, Karen Brenchley, when asked why it decided to enter the legal market.