Over 40% of UK top 40 law firms look set to forge new partnerships with non-solicitors business in the next two years, according to recent research.
Nine of the UK's leading 40 legal practices say they may seek to join forces with a non-solicitors practice in the next 24 months, findings conducted by Smith & Williamson, the accountancy and investment management group research, have found. And of those nine, three describe such a move as 'likely'.
Some 21 firms from the top 40 took part in the study - these figures are indicative of the entire top 40 group of UK law firms, suggesting that 17 (or 43%) may join with a non-solicitors practice and become an alternative business structure (ABS).
'This could transform, not just the provision of legal services, but the entire professional services sector within a very short space of time,' said Giles Murphy, head of professional practices at Smith & Williamson.
'It has been widely assumed that it will be smaller and regional firms which are most likely to link up with other professionals and take up the new business structure made available by the Legal Services Act, but this research confirms that some of the City and larger law firms are also exploring this route and some very actively', he added.
When factoring in results from the UK's entire top 100, of which 54 took part - 16 of the 54 practices expressed an interest in joining with a non-solicitors firm in the next two years. This suggests that just under 1 in 3 (30%) of the UK's top 100 may seek to become an ABS and join with a non-solicitors practice.
Accountancy firms appear to be the preferred type of business with which to tie up. A quarter of the surveyed respondents who were interested in setting up with another type of professional see accountants as their preferred type of firm, followed by patent agents and surveyors.
In December 2012, the ICAEW submitted its bid to become a regulator of probate services and Alternative Business Structures (ABS). A decision is expected by the end of this year.
Felicity Banks, head of business law at the ICAEW, said: 'As an institution we are thoroughly in favour of wider multi-disciplinary practices as it will give clients a much better service.
'In fact, very many ICAEW member firms are already multi-disciplinary firms involving professionals such as actuaries, chartered surveyors or independent financial advisers. Being able to add solicitors to the professionals advising their clients could significantly strengthen their service.'
The survey also asked about raising external finance and six top 40 firms said they may seek external finance, with five of these actively considering private equity - one potentially raising over £50m.
Respondent firms appear most likely to use this extra finance to fund the long-term development of the practice, develop further sectors and to fund recruitment of teams and acquisitions, the survey found.
Ten of the 21 participating top 40 firms said they had acquired a team in the last year, with four firms acquiring two or more teams. Three teams changing hands included over 20 people although the majority included five individuals or less.
'As it becomes increasingly difficult for firms to grow organically in today's tough environment, there is a clear appetite for acquiring teams from others. Given that the Legal Services Act provides an additional source of funding, we should expect to see firms taking advantage of this in the near future as a way of funding an acceleration of growth through acquisitions and team moves,' said Murphy.