Transcript ABS – Big Bang or Big Whimper?

ABS – Big Bang or Big Whimper? – and how
will it affect you?
Peter Scott Consulting
www.peterscottconsult.co.uk
Some topics for discussion today
• Appetite for ABSs?
• Opportunities and threats?
• How are you going to compete?
Appetite?
‘At this stage I am very pleased with the level of interest’
David Edmonds
Chair, Legal Services Board
April 2011
Appetite?
‘ABSs will not be introduced until ministers are convinced that all the
appropriate regulatory arrangements have been made, the necessary
safeguards are in place and the impact of the new regime on the legal services
market is fully assessed’
Dominic Grieve
Attorney General
April 2011
Types of ABS
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LDPs which will become ABSs
MDPs?
Quoted ABS?
ABSs with non-lawyer ownership?
Legal Disciplinary Practices - LDPs
• LDP with non-lawyer managers will be ‘passported’ to ABS
status
• Market Appetite?
• Benefits for the legal profession?
What is an MDP ABS?
The Clementi report described MDP ABSs as
‘practices which bring together lawyers and other professionals
to provide legal and other services to third parties’
• Market Appetite?
• Regulatory hurdles?
The Clementi report
“in the areas of consumer debt, inheritance planning or personal taxation, a
combination of both legal and accounting skills could be a valuable asset for the client.
Research carried out by MORI suggests that there is some consumer interest in the
convenience and accessibility of one stop shopping”
Sir David Clementi
Final Report, December 2004
What will clients want?
• Will they want to buy professional services from a one stop shop?
• Will they care?
• How will the MDP ABS gain competitive advantage over rivals (both law
firms and accountants)?
What will be the USP of the MDP ABS?
Regulation?
The Clementi report considered that the most fundamental issue with MDPs
was that of regulatory reach.
“how could a legal services regulator exercise power over people who were
not lawyers, were offering clients a different professional service and might
have different codes of practice in areas such as client handling?”
A quoted ABS?
• The Slater & Gordon experience?
• Other professionals which have floated?
• Aims and Benefits?
The non – lawyer owned ABS
• ‘Tesco law’ (more likely ‘Co op law’)
• Market appetite?
Investment appetite by non – lawyers?
• Types of investors?
• Their Aims?
• Their Requirements?
Some issues to deal with?
• Ambitions of younger lawyers?
• Will external investors understand some law firm
cultures?
• Will they be put off by the new regulatory code?
Appetite by owners of law firms?
• Which types of firms?
• Aims?
• How much working capital do law firms really need?
Who will be your markets competitors in the
brave new world after 6 October 2011?
The need to be competitive
“Competition is a process by which …

services that people are not prepared to
pay for

high cost methods of production and inefficient
organisations

are weeded out and

opportunity is given for new…services methods and organisations to be tried” *
This is the space ABSs and others will fill
*Everyman’s Dictionary of Economics – A. Seldon and F. G. Pennance 1964
You have developed a realistic plan, but…
This will require RESOURCE - resource which
many firms cannot realistically and at
an economic and acceptable cost provide
themselves
But your competitors may have the
resources
Is lack of resource making you
uncompetitive?
 Often a lack of resource of expertise
(client perception surveys will show if this is the
case)
 Often a lack of financial resource
(inability to invest in your people and in the
business)
Resource to enable you to…
attract and retain the best talent
Resource to enable you to…
provide clients with the depth
and breadth of expertise they
 will require
 when they need it
 where they need it
Resource to enable you to…
build the quality management which will be
required to successfully compete in the future
Resource to enable you to…
provide the necessary support infrastructure
to underpin the effective provision of high
quality professional services
Resource to enable you to…
provide the necessary technology to make you
more efficient and profitable
Building resource to compete
Will you be able to build sufficient
resource on your own to achieve your
goals?
The profession is too fragmented
 Nearly 11,000 law firms
 Over 85% have 4 or fewer partners
 Most will not be able to compete and survive if
they remain as they are
Size does matter
Competitive growth models?
• Organic growth alone?
• Some form of consolidation?
How can consolidation enable tomorrow’s
law firms to compete?
 Not about size for the sake of size
• A means to develop resource at an acceptable economic
cost to each constituent firm which individual firms cannot
on their own provide
 A better platform on which to build a more competitive law
firm capable of succeeding in tomorrow’s legal market
Your Vision?
Any questions?