The legal services industry has recently experienced a major shake-up. In the past, for a legal practice to operate, lawyers had to be the majority owners of the firm. As plenty of us know, often at our own expense, this resulted in a number of small and often less competent firms being able to successfully trade.
However, with the introduction of the Legal Services Act, you no longer needed to pass the law society exam to own a firm and as such, banks and supermarkets are now also able to sell consumer legal services in England and Wales. This means that the market has been blown wide open.
From the consumer’s point of view, this move means that there will much more choice available and, perhaps more importantly, at a competitive rate. However, for many smaller legal firms, they will now find it increasingly hard to compete in the market and in order to be economically viable, the only option available is to amalgamate with other businesses.
This development ought to be viewed as a great opportunity for well-qualified IFAs to team up with legal firms in order to grow both businesses and to offer an extended range of services to existing clients.
At the moment, many solicitors act as trustees and as such, have an obligation to take care of investments. This means that they can be liable if they have not managed a client’s money in an appropriate manner.
Teaming up with better-qualified IFAs would help to reduce this risk and provide a better service to their clients.
On the other side of the coin, it is not always appropriate for IFAs to get involved with specific trusts and so linking up with a legal firm could provide a welcome solution to this problem as well as a good source of reciprocal business.
Both IFAs and legal firms need to be more imaginative about where they are getting their business from. The legal market is becoming increasingly crowded and so lawyers, particularly those with smaller firms, need to make sure that they do not get swept away by the tide of supermarkets and banks that can now offer a cheaper and sometimes more accessible service.
The Legal Services Act is just one example of how this industry is continuously evolving and in order to survive, the businesses within the market must develop too.
Sheriar Bradbury is managing director of Bradbury Hamilton