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Uncertainty the biggest barrier to growth, ABSs say

New business models more productive than traditional firms, survey suggests

29 October 2013

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Uncertainty about future legislation and regulation is the biggest barrier to growth in the legal services market, ABSs have said in a report for the LSB.

The second biggest barrier, according to 49 ABSs regulated by the SRA and involved in the survey, is the existing burden of regulation, and only after that the traditional partnership model for law firms.

Fourth on the list was access to capital and the reluctance of the banks to lend. It was followed by two further barriers to growth, but these were cited by only 10 to 12 per cent of ABSs, rather than the 39 to 47 per cent recorded for the top four.

The less significant barriers were the fact that consumers like traditional services and the lack of information on how to innovate.

The LSB report also found that levels of productivity among ABS firms were consistently higher than other types of firm over the past three years, as measured by turnover per fee earner.

ABSs also had better complaints resolution ratios, resolving 11 complaints for every one referred to LeO, rather than four for traditional firms.

ABS firms were "associated with more frequent reports of new innovations when compared to other SRA-regulated providers", with 13 per cent reporting innovations not related to their business structure, as opposed to one per cent of traditional firms.

Only 52 per cent of traditional firms had a website they used for advertising, compared to 91 per cent of ABSs.

Chris Kenny, chief executive of the LSB, said the research had a fundamental role in improving understanding about the legal services market and how the Legal Services Act was bedding down.

"The results, although early and somewhat tentative already show that real benefits are being delivered for the public," he said.

"It is vitally important that we understand this as we move forward and see further change in the legal sector in years to come."

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Legal services