It's Official: UK Law Firms Soon For Sale
Long-anticipated legislation allowing nonattorneys to own United Kingdom law firms passed its final hurdle in the British Parliament today.
The Legal Services Bill will soon be signed by Queen Elizabeth II, in the first step toward a legal market for buying and selling UK law firms that should be operational by 2011, according to Bloomberg and the London Times. The bill is expected to allow law firms to merge with other businesses, such as banks and supermarkets, to offer one-stop shopping for related or convenient services.
There is now no comparable United States effort to allow nonattorney law firm ownership, as an ABA Journal article discusses in depth.
However, as discussed in previous ABAJournal.com posts, law firms in Australia already are permitted to have nonattorney ownership and, with today’s change in British law, momentum is growing to consider a change there, too. In what was billed as the world’s first law firm sale, Slater & Gordon, a 140-attorney personal injury shop in Melbourne, brought in some $35 million by selling shares in the firm in May.
Meanwhile, law firm administrators here have said American firms could be at a competitive disadvantage if counterparts can obtain funding from nonlawyer investors and U.S. firms can’t.
Says one legal consultant, discussing London’s elite law firms: “If a Magic Circle firm were to … go public and have access to the deep pool of capital, they could use it to build their practices in New York, and the first thing you would hear out of the mouths of managing partners is ‘we need a level playing field.’ “
Already, a company has been established to assign monetary values to the world’s 200 biggest law firms, in anticipation of the brave new world of nonattorney ownership.
Because it’s never been done before in the UK, no one knows exactly how the “undoubtedly revolutionary” new legal market in the British legal market will operate, Howard Morris tells Bloomberg. He is chief executive officer of Denton Wilde Sapte, a London law firm.
“The big question is whether law firms will raise capital to buy other firms or practices,” Morris says. “I’m sure some will, but the question is will it work?”
In any case, the permitted sale of UK law firms appears likely to be another force for significant change. Two other major forces—computerized information technology and outsourcing—already are likely to make much of modern law practice obsolete within the current century a British author predicts, as detailed in an ABAJournal.com post earlier this week.