When all is said and done

Another week and another announcement by a wannabe ABS that it intends to get into the legal services market big time. First it was QualitySolicitors which suddenly raised the temperature last month by selling up to venture capitalists Palamon Capital. Then, a fortnight ago, Cooperative Legal Services '“ set up by the Co-op in 2006 before the Legal Services Act even received Royal Assent '“ said it would launch a family legal advice service as soon as the Solicitors Regulation Authority was in a position to regulate alternative business structures. And last week, In-Deed, the conveyancing service set up by Rightmove founder Harry Hill, said it will buy up law firms to expand its legal services offering into areas such as will writing and personal injury work.

For anyone interested in setting up an ABS, there are a few basic options depending on who you are, where the capital is coming from, and how the service is delivered.

In-Deed is a hybrid of all models presently in line to become ABSs, which raises several questions about its strategy. The organisation already has access to market via a panel, so why buy law firms and take on the liabilities?

One possible answer is that, as the prospectus issued ahead of In-Deed's AIM listing in May suggested, the success of the business at this stage depends very largely on Hill being involved.

But by buying up firms, the business acknowledges the value in having law firms involved at the point of service delivery, even '“ possibly '“ in law firms continuing to be the point of delivery. So, far from pushing solicitors out of the market, it places them at the heart. Taking on a firm's liability becomes the price for this essential selling point. The only difference is that as a shareholder you also get to influence the strategy of the business in a way you wouldn't be able to if you had to rely solely on leads, however good these are.

But the most interesting question is why In-Deed and all these other organisations are so keen to tell us they want to become ABSs when they actually have so little to say about their plans. The answer may be disappointingly obvious but nonetheless absolutely critical. It goes back to the first mover advantage. Each of these businesses needs to attract the best partners now. Many of the mid-size and larger law firms have decided to go it alone, it seems. Which means there can't be too many good smallish firms out there willing to explore external investment options. Whether you are In-Deed, QualitySolicitors or LEGAL365, you want talented lawyers to come to you before your competitors snatch them. Because when all is said and done, and machines have replaced men for all process-based transactions, the difference will be in the experience lawyers can bring.

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