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EXCLUSIVE: ABSs had negligible impact on City law firms, Law Society president says

'They probably they haven't felt much impact from ABSs, if any' 

6 August 2014

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By Manju Manglani, Editor (@ManjuManglani)

Alternative business structures (ABSs) have not had the expected impact on the legal services market in England and Wales, the new Law Society president has said.

Speaking exclusively to Managing Partner on this subject, Andrew Caplen said: "ABSs in the UK haven't affected the market in a great way yet".

He noted that there have been some high-profile ABSs in the consumer market, particularly in personal injury law, but that even there the impact of large ABSs like the Co-op has been lower than expected.

"It's difficult to know what the effect of ABSs is at the higher end of the market, the City market - they probably haven't felt much impact from ABSs, if any," he said.

"If you then go to the lower end of the market with regard to the small high street practices, whether they have suffered from competition from ABSs is hard to say."

He noted that a key advantage of ABSs is the opportunity to obtain private equity funding to enable business growth.

"That will enable firms to be much more innovative, to perhaps be much more internet-based, to be much more mobile, to be much more market conscious. So those British firms that are operating in that way could have an advantage in some markets, depending upon the restrictions locally."

Caplen will be travelling to Boston tomorrow to speak at the American Bar Association's (ABA's) annual conference.

The ABA's president, James Silkenat, previously suggested that private equity investment in law firms could lead to a conflict of interests.

In an exclusive interview with Managing Partner,Silkenat said the US is "years away" from allowing non-lawyer ownership of law firms and that it "would never be passed" due to client confidentiality, client service and ethical concerns.

However, Caplen disagreed that there is an inherent conflict of interests that should prevent law firms from accepting private equity funding.

"There can always be conflicts of interests, but lawyers are used to managing conflicts of interests and the regulatory framework means that firms have to be very careful in such areas and abide by the rules," he said.

"So it's a question of the rules being correct, but also being kept to by firms, and monitored as appropriate by the regulatory body."

 

 

 

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