Firms make ‘initial contact’ with external investors
More than two-thirds of law firms would be ‘comfortable’ securing funding from an external investor when Alternative Business Structures are introduced in October, and 30% have already made initial contact with potential investors, according to research released today. A survey of 200 solicitors carried out for the Gazette by law firm referral network Contact Law showed a high level of interest in the opportunities presented by the Legal Services Act among its member firms. Some 65% of solicitors said they would consider doing work with a non-legal brand such as a supermarket that wanted to enter the legal services market. While only 26% said their firm would contemplate being acquired by such a brand, 61% would consider giving away a share of the business to a non-legal investor. In terms of funding, 65% said they were ‘comfortable securing external investment from a non-legal investor’, while 30% said they had made ‘initial contact with non-legal businesses or individuals with regard to investment or collaboration’. While 72% of respondents thought they would be able to continue to exist as a traditional law firm without any financial or marketing connections to non-legal partners, 28% thought they would not. Nearly 80% of respondents said their firm was looking to expand in the future. Contact Law director Dan Watkins said: ‘Eight out of ten firms polled expressed their desire to expand their practices, and almost half said that the new legal structure from October would allow them to secure extra funding. ‘However, although there is definitely significant interest in working with non-legal brands and a willingness to bring in non-legal expertise among law firms, most firms stopped short of considering merging with a non-legal partner.’ He added: ‘What’s apparent from the survey is that although most law firms don’t feel it’s a necessity to have a tie-up with a non-legal partner, and are confident that the very existence of their practices won’t be threatened by the introduction of alternative business structures, they do recognise that it makes complete commercial sense to actually do something and not just sit on their hands.’ Contact law works with 5,000 solicitors throughout the UK.