More major law firms assess plans to join 'Tesco law' revolution

Kennedys and Hill Dickinson assess ABS as 65 applications lodged

Hill Dickinson and Kennedys have become the latest top 50 law firms to confirm plans to convert to an alternative business structure (ABS), as growing numbers of firms gear up for the ‘Tesco Law’ revolution.

DAC Beachcroft and Withers, as well as Keoghs, are all actively considering an ABS conversion, which permits non-lawyer ownership of law firms through either external capital injections or a float and allows law firms to tag on non-legal services.

Field Fisher Waterhouse is planning to review the potential benefits of an ABS conversion during the coming financial year.

The findings come as the Solicitors Regulation Authority (SRA) confirmed that it had received 65 applications from law firms and non-legal companies to convert to an ABS little more than two weeks after it started accepting applications earlier this month (3 January).

The implementation of ABSs will deliver the most radical element of the Legal Services Act, the sweeping deregulation in England and Wales widely expected to have a huge impact on retail and corporate services.

Hill Dickinson, which has not yet applied to the SRA, is currently in talks with clients about potential joint ventures that could see it teaming up to provide non-legal services or enhance its existing practice through additional capital from clients. The northwest firm is planning to apply in 2012-13.

Hill Dickinson managing partner Peter Jackson (pictured) said: “We are currently focusing on opportunities with clients to enhance individual products we provide. This may entail joint ventures with an input from clients of both finance and expertise.”

Kennedys, meanwhile, is in the process of applying to convert to an ABS in order to retain the non-lawyer partners it already has under its Legal Disciplinary Partnership (LDP) structure.

LDPs with non-lawyer partners are required to convert to an ABS by October 2012 or remove non-lawyers from the partnership. This has prompted Dickinson Dees, which is also an LDP, to review whether it should convert or revert to a traditional law firm structure.

Meanwhile, DAC Beachcroft, which already has subsidiary businesses including Beachcroft Claims, is reviewing whether an ABS structure would be a better fit for some of its business activities, while Field Fisher plans to look at the potential tax and business generation benefits of an ABS conversion. Bolton-based Keoghs is understood to be in talks with a private equity house about outside investment, although it declined to comment beyond saying talks were at an “exploratory stage”.

To date, Irwin Mitchell has been the only top 50 law firm to confirm plans to convert to an ABS. The firm, which has already applied for a licence, told Legal Week its plans could include adding additional non-legal business services to its offering. It has also not ruled out an initial public offering as a means of raising funds that could be used for acquiring legal teams and buying market share.

Chief executive John Pickering commented: “There could be M&A activity. We already are a multidisciplinary practice in the sense that we have subsidiary businesses. The ABS structure would allow us to integrate and also possibly add new services. We want to take a more holistic approach to client needs and when you see it from that perspective, the possibilities really are endless.”

The firm took its plans forward this week (16 January) with the hire of PricewaterhouseCoopers’ former UK vice-chair Glyn Barker as chairman designate, although the appointment is dependent on SRA approval of Irwin Mitchell’s ABS application.

Top 20 firms including Eversheds, Simmons & Simmons, Berwin Leighton Paisner (BLP) and Pinsent Masons told Legal Week that while they have no current plans to convert to an ABS they are not ruling it out for the future. Larger firms including Freshfields Bruckhaus Deringer, Hogan Lovells and Slaughter and May ruled out an ABS conversion.

ABSs – a timeline

November 2006 – Government unveils Legal Services Bill
2010 – The Legal Services Board outlines a timetable for ABSs to be running by October 2011
February-March 2011 – Irwin Mitchell and Co-operative announce alternative business structure (ABS) conversion plans
6 October 2011 – Legal Services Act 2007 is implemented
23 December 2011 – Solicitors Regulation Authority (SRA) gains licensing authority status
3 January 2012 – SRA begins to accept ABS licence applications
19 January 2012 – SRA confirms it has received 65 applications
Late February 2012 – SRA aims to hand out first ABS licences

Related:

• Irwin Mitchell gears up for ABS move with PwC hire for new chairman
• Co-op Legal Services set to recruit 150 staff in expansion drive