The legal profession will undergo the most profound changes at Big Bang, much in the same way as the financial sector did following the 27 October 1986 changes to the Rules of the London Stock Exchange. The old partnerships were swept away, merchant banks became investment banks and the Yanks came riding in to town with open cheque books and an eye to the future. It has nothing to do with me – that is what members are still saying even now. There are a remarkable number of members of the legal profession who have taken little or no notice of the Legal Services Act 2007 and the discussion that preceded it. The consequences are that many firms are not in a place where they will be ready to comply with the new requirements of the regulator by the time of the Big Bang. In fact, the commonly held opinion is that:
- Too many qualified lawyers;
- Too many law firms;
- Lawyers pay themselves too much; and
- Much of what lawyers do can be done by non-qualified staff or a computer!
The impact of Big Bang will be as much on individuals as firms. If you are a partner you will feel it in your pocket. Compliance costs will rise as incomes fall and margins have to be squeezed. If you are an employee you may find your firm no longer needs your skill set? Can you make yourself more productive/affordable/flexible so as to retain a job? In addition to the pressure on profit margins due to the massively increased costs of compliance firms will see a reduction of fee income due to such factors as:
- the commoditisation of work in such areas as residential conveyancing and probate;
- the Jackson reforms in litigation costs and funding;
- withdraw public funding from most civil cases;
- due diligence and bulk documentation services in low-cost economies shifting work overseas.
If you think that you or your firm are immune you must think again and fast!
Rest assured that the Big Bang will do a number of things and that the Legal Services Board and Solicitors Regulation Authority Agendas include:
- the new regulatory regime;
- firms must appoint professional compliance managers;
- firms must appoint professional accounting and administration managers;
- detailed business plans demonstrating financial viability and capital adequacy;
- five year competence testing for lawyers;
- non-lawyers to own and control businesses that provide legal services.
The Solicitors Regulation Authority has adopted outcomes focused regulation … it is just a matter of time …! Despite this there is still a myriad of rules with which lawyers and firms must comply. We must all consider this, the future and act fast.