Wednesday, April 27, 2011

The Action Hots Up--Irwin Mitchell Declares ABS

(thanks to Paul Mannix)

Now the Alternative Business Structure action is hotting up thanks to Irwin Mitchell's declaration that it will incorporate and use its investment to take on the many mid-tier law firms wondering what to do come October 2011.

If anyone is in the dark, this year the first ABS come into existence under the provisions of the Legal Services Act 2007.

The legal profession is being so complacent and ostrich-like about ABS that Irwin Mitchell's action is a necessary corrective. It's clear from a basic analysis of the law firms in the UK that the mid-tier firms are essentially fungible. They all say they do the best work for their clients, they all hire the best graduates, they all take the finest care of their clients, and they all learn about their clients' business. It's impossible to distinguish one from the other. And most of what they say is "iffy" at best. (I'm being very mild putting it this way.)

If these firms don't think strategically about their futures, they're lost. Irwin Mitchell has moved from being a personal injury firm into a law firm that will be able to offer a range of custom made services with a strong commoditized services wing that will offer white-label services to low cost providers. It is this last part where the investment will earn its return.

The comments on The Lawyer article are of interest. They represent the traditional views which are no longer consonant with the way the legal services market is moving. I'm surprised by the blinkered views especially as this is not new. Irwin Mitchell is not unlike Australia's Slater and Gordon, a personal injury firm that floated in 2008.

Let me reflect on three aspects of the Slater and Gordon flotation that are relevant to the UK. First, the firm was reconstituted with a transparent and meritocratic career structure, something which few UK law firms have. Second, the firm grew by merger and acquisition and its success can be measured by its stock performance. Participants in the firm now possess tradeable equity. Third, the system of regulation predicated on the back of the Australian incorporated law firm legislation, ie. outcomes focussed regulation, appears to be working. See Christine Parker's paper. The UK's version will be starting soon.

Now let's see if other law firms can shake off the dust.
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