The majority of large companies in the UK are happy to work with law firms adopting the various new structures possible under the 2007 Legal Services Act, a survey by the tax and advisory firm KPMG has found.
According to the KPMG survey, clients are more concerned with quality and the right level of people than the firm’s organisational structure. For example, over 75% of large companies would be prepared to buy services from so-called Multi-Disciplinary Practices (MDPs). Some felt that a move to MDPs would bring greater efficiency and reduce the need for complex relationships with multiple providers.
Respondents were even more enthusiastic about the possibility of external ownership of law firms. Almost nine out of ten respondents are prepared to work with firms that are externally owned, with some believing such a structure could lead to a more commercially focused, service oriented and cost effective approach.
Stephen Mayson, Director of the Legal Services Policy Institute at The College of Law, who collaborated with KPMG on the survey, comments:
“The responses of some of the major clients of legal services in this country are important and illuminating. Their views often challenge the assumptions on which Sir David Clementi framed his proposals as well as the spirit in which the largest law firms have tended to relate to their clients and to the potential opportunities afforded by the new legislation. Indeed, with many of those surveyed seeking improvements in service and value for money, the Act could be an important catalyst for change in the sector.
"Some messages from this survey might surprise the larger law firms. First, clients want to retain direct and independent access to barristers, so they are enthusiastic about counsel joining law firms. Second, clients were ready to consider buying services from a multidisciplinary practice – on the basis that this might be more efficient and could simplify relationships with providers. This challenges the view held by many lawyers that MDPs are a non-starter. Third, clients are largely neutral about the ownership of the law firm.”
However, according to KPMG, proposals for so-called Legal Disciplinary Practices (LDPs) have not received an enthusiastic welcome from larger companies, some of whom are worried about any restrictions to their access to counsel. Over a third (36%) of respondents to the survey said they were unlikely to use barristers tied to a particular law firm, preferring direct and independent access. And only one in three (34%) felt that having both types of lawyer in the same firm would improve overall service. Clients were fairly ambivalent about who should own such practices, the survey shows.
Stephen Bligh, UK Head of Legal Services at KPMG comments:
“What the survey shows very clearly is that there is now a greater focus on the value clients receive from law firms. Regardless of their structure, firms will ultimately be judged on their ability to provide a consistently high level of quality for all their services, wherever they operate.
"Many law firms assume that the corporate marketplace for legal services will be unaffected by the Legal Services Act. This is a dangerous assumption. It’s true that some law firms are resistant to change – why should they want to change what is patently a very successful model for the partners in the firms?
"But the legal marketplace has yet to see the consolidation that has taken place in other fields. The need for increasing economies of scale and resources will likely drive consolidation and the Legal Services Act is likely to act as a catalyst for change. A bold and aggressive firm with outside capital may develop a different business model which could challenge the status quo of most partnerships, and firms without clearly defined strategies may find it difficult to react to a changing marketplace.”
KPMG's survey revealed that there was a strong belief amongst respondents that changes in organisational structure could usher in cultural change to law firms. Two thirds felt that the introduction of professional managers into ownership would bring greater efficiency and improved service - with less emphasis on hours billed and more on giving clients real value.
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