It has been an open secret that financiers, reportedly including Goldman Sachs, Cazenove and Noble, have sized up the market with varying degrees of enthusiasm; managing partners have grown used to PowerPoint presentations talking up the joys of external capital. But Lyceum has gone considerably further, going on the record with its commitment and appointing a three-strong board of high-profile figures to help scout out opportunities.
Yet the case for the LSA’s impact needs to be re-iterated, as many lawyers argue it will mainly affect the high street, leaving the mid-tier and upper echelons of the profession untouched. This seems either massive complacency or wishful thinking; it is probably a bit of both, as such substantive reforms look certain to have a major impact eventually.
The pace and direction of that revolution are harder to pin down because such developments depend on events not theory. Take the closest the profession has been to a revolution in recent years - the late 1990s legal assault of the big accountancy firms. The accountants were ultimately dismissed as a joke but in the run-up to the Wilde Sapte/Arthur Andersen merger, it was widely assumed they would sweep all before them. The deal fell apart, damaging the accountants sufficiently that they couldn’t make ground, until Enron effectively ended the campaign three years later. Revolution averted. But had the deal been a success, does anyone seriously doubt the accountants would have become a major force?
So it will be with the LSA. All it will take is one firm to successfully use outside capital to transform its business and the dominos will fall as others look to follow suit. Likewise, a damaging deal will turn sentiment the other way, at least for a while. Interestingly, the original model of a law firm floating has less resonance now, not least because of upcoming tax reforms that will make it less attractive. But there are lots of ways to skin a cat and the lure of outside capital, perhaps co-investing or even securitised profits, will be strong.
One final point. At a time when many top City partners struggle to find roles after their legal careers end, how long will it be before financiers start retaining such veterans to help them put together legal deals? After all, dominos is supposed to be a pastime for one’s autumn years.
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