Lead players are showing scant interest in the new model law firms
Only 5% of the UK’s top 100 law firms believe the Legal Services Act 2007 (LSA 2007) will have a “significant impact” on them.
Reforms under the Act, which come into force next week, introduce Legal Disciplinary Practices (LDPs)—law firms which include non-solicitor lawyers, and up to 25% non-lawyers.
The top 100 firms were quizzed by professional regulation law firm, Legal Risk LLP, for its sixth annual survey on professional indemnity and risk management.
Partner Frank Maher says: “Interest is very low, and we are not seeing what was envisaged, which was the head of marketing or IT becoming a partner.”
Maher says that a fifth of the top 100 firms, and a third of top 30 firms, thought the Act would have “no impact”, while the rest thought it would have “little impact”.
“Realistically, in the current economic climate, firms are not appointing many new partners, and we have had some people questioning why they would want to take on the liability of being a partner. Also, this is only an interim measure, and any firm that converts to LDP status now will have to convert to Alternative Business Structures in a few years’ time and conform to a whole new set of regulations,” Maher adds.
The survey also reveals that 16% of the firms questioned had delayed renewing their insurance because of concerns about the industry. Maher says: “This is a real issue. It’s not just about how secure these companies are now, but in five or seven years’ time when they have to pay out on claims.”
A third of firms chose Travelers as their insurer, and 22% chose QBE. Some 14% of fi rms overall, and 23% of top 30 firms, said they had changed their insurer, with price cited price as the main reason.
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