An end to silo-based legal services

Looking outside the legal box to remain competitive is not a new concept for firms; the only surprise is that the SRA is propounding the move, says Ian Muirhead

The strategy director of the Legal Services Board has predicted that 2015 will see 'increased turbulence in the legal market, with more new entrants, consolidation and the exit of those who cannot adapt'.

A dramatic reduction in the number of law firms has long been on the cards, due largely
to consolidation, and the motivation is clear: economies
of scale, the ability to fund improvements in technology and marketing, and the provision of
a more comprehensive set of
legal services.

Unhappy marriages

However, recent research by Byfield Consultancy into the top 200 firms showed that the rush to merge is resulting in some unhappy marriages: only 43 per cent of firms that had merged in the last five years considered the majority of law firm tie-ups to have been a success; 21 per cent said they had not, while the rest declined to answer.

Perhaps surprisingly, it is the Solicitors Regulation Authority (SRA) that has been suggesting
a better response to the threat of competition might be to look outside the legal box and provide a more comprehensive client service. The word 'holistic' now features regularly in the SRA's vocabulary.

What might be the advantages of looking outside the legal silo? Perhaps the fact that, for the most part, legal services are transactional, whereas the key to future success lies in the maintenance of ongoing client relationships. The accountants have quickly cottoned on to this, pointing out that the addition of probate to their menu of services will enable them to satisfy the full range of professional needs of the older client, including tax, trusts, estate planning and administration, and, in many cases, financial planning.

Will writing would be an
easy add-on, requiring even less formality than the surprisingly undemanding requirement to qualify for probate work, which involves a two-day course and
a 50 per cent pass mark in an exam consisting of multiple choice and short-answer questions.

Solicitors might also ponder the SRA prediction that the professional services market will be 'no longer defined by professional titles'. Members
of the profession are rightly
proud of their qualifications,
but the question must be asked whether 'solicitors' is the most suitable brand for a business. After all, part of the reason
for the Legal Services Act was
that some 40 per cent of the population was found to not use legal services because they felt intimidated by the mystique or assumed they would not
be able to afford the fees.
Saga's ads make fun of these vulnerabilities, while Slater
and Gordon make a point
of referring to themselves as lawyers rather than solicitors.

Support services

The SRA has suggested that firms might respond to the threat from accountants by providing accountancy and other business support services themselves, and has identified separate businesses as an appropriate medium for such
a development; hence the proposal to relax the separate business rules.

Significantly, the SRA spokesperson commented:
'We believe that this will help solicitors' firms to become more sustainable by offering a wider range of services.'

It seems a little strange that
it should be the SRA that is proposing the change, and thereby relinquishing part of
its authority, whereas the Law Society, whose interest should be in assisting solicitors to compete against the new entrants to the legal services market, is opposing the change. But perhaps it is the SRA that is more in tune with the times.

The criticisms of the SRA proposal have been based on the negative assumption that they would enable solicitors to avoid regulation, but a more positive angle is that separate businesses permit solicitors to work with non-solicitors without having to surmount the hurdles of forming alternative business structures. One of the great advantages of this interaction is that solicitors are able to benefit from the less parochial view of non-solicitors and their potentially greater facility with technology, marketing, and business management.

If the solicitor brand is to remain an inhibitor of business development, then more individuals might prefer the lawyer brand and a more accommodating regulator than the SRA. Perhaps the SRA's proposal was made in its own interest after all. SJ

Ian Muirhead is a director at SIFA