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Lexis+ AI
James Castro-Edwards

Counsel, Arnold & Porter

Root and branch

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Root and branch

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With an explosion of 'multi-disciplinary practices' predicted, James Ward explains how his firm made the leap from accountants to MDP

The legal services landscape is set to change dramatically from 6 October, when reforms under the Legal Services Act 2007 will allow non-legal businesses such as other professional advisers, banks and even supermarkets to share a marketplace with traditional solicitors' firms.

Traditional law firms are now looking for ways to diversify in response to this potential new threat, with multi-disciplinary practices (MDPs) one possible route.

My firm Whale Rock was part of the early wave of MDPs that sprung up over the past few years. Launching as an accountancy practice in 2004, we then decided to branch out and add legal services to our offerings. Why did we do it? The answer is simple: we started to see demand for it from our accountancy clients.

Many of our clients are based in the oil, gas and mining industries. This ranges from companies drilling in the North Sea through to firms looking to set up new operations in the Middle East, Africa or, indeed, anywhere else in the world. This can throw up a whole host of legal and accounting issues, ranging from FSA regulation through to dealing with countries which may be subject to UN sanctions, such as Iran or Ivory Coast.

As an increasing number of accountancy clients began to enquire about legal matters, we realised there was a crossover between the two disciplines which could have great business potential. After all, if we could help our clients with highly complex accounting matters, why shouldn't we be able to do the same with equally complicated legal queries? It made good business sense to be able to offer our clients both services under one roof, rather than advising them on accountancy matters and then letting them go elsewhere for their legal and compliance requirements. In many cases, our clients simply didn't know where to turn for appropriate legal advice, simply because they couldn't find anyone specialising in their sector.

Three in one

With this in mind, in 2008 Whale Rock Legal was set up, owned and managed by fully qualified solicitors. This sat alongside another professional division known as Whale Rock Company Secretariat, which was launched in 2007 after we acquired Lawrence Graham LLP's company secretarial practice. Operating under the umbrella of Whale Rock Professional Services Group, the Whale Rock brand name is owned by a limited liability partnership, which licenses it to the accounting, legal and company secretarial arms, which each operate as three separate trading entities. Our legal arm is regulated by the Solicitors Regulation Authority (SRA) while our accounting entity is authorised and regulated by the Institute of Chartered Accountants in England and Wales (ICAEW).

The brand licensing does not convey control over client work, which has allowed the independent trading entities to operate successfully to date. With the MDP developments, we are investigating whether to become a single firm. The group has enjoyed significant organic growth each year since it was first established seven years ago, which I believe is due in part to our decision to provide an MDP structure ahead of the implementation of the Legal Services Act.

Our clients include AIM-listed, FTSE100 and Fortune 500 companies, together with large American private equity firms. I believe that becoming an MDP has played a major part in us winning these clients and in helping the company continue to grow. By focusing on offering specialist services that other firms do not provide, we have been fortunate enough to receive regular referrals from the large international accounting and legal firms, including the Big Four, which cannot provide these services but recognise what we do.

However, we're not resting on our laurels and are still looking ahead. While having three disciplines under one roof has proved beneficial, our clients still face the bureaucratic hassle of having to enter into numerous engagement letters with the separate entities. Because our services are provided by multi-disciplinary teams of accountants and lawyers, we are looking at the possibility of a single trading entity with a single regulator covering both our accountancy and legal operations. It's too early to say exactly how we will do this, but we are considering our options and discussing these with the different regulators.

Breaking barriers

As a firm, we believe that the breaking down of regulatory restrictions is a good thing for both the legal and accounting professions. While many high street firms are understandably worried about the potential new competition they face, the Legal Services Act will provide an opportunity for practices to expand into exciting new disciplines, particularly if these are not already covered in their local area.

Being able to offer different disciplines in one place will make it easier for firms to interact with clients. It will also make it easier for them to cross-sell services and for multi-disciplinary teams to work on specific assignments. It may also enhance a practice's equity value.

I doubt that many of the larger firms will rush to become MDPs because they will still have the same conflicts and independence issues that firms such as Klegal and KPMG or Andersen Legal and Garretts experienced more than ten years ago. Our offering is totally different, being an 'in-house team' model.

Becoming an MDP will have benefits for high street lawyers and accountants. But this market has different issues born by its small personal clients, over whom high street partnerships tend to be very protective.

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