The so-called 'Tesco Law' which came into force in October 2011 looks set to revolutionise the provision of legal services in the UK, with one third of the top 40 law firms looking to join forces with a non-legal business partner in the next two years.
The Legal Services Act 2007 includes provisions which allow non-legal entities to participate in the ownership, management and provision of legal services.
The statute was dubbed 'Tesco law' as many foresaw that it would pave the way for major retailers to become involved in the provision of services such as wills and probate and conveyancing.
However, despite the moniker Tesco has so far indicated that it will not be branching out into the sector for the foreseeable future.
A new survey of the top 40 law firms in the UK has revealed that a significant number are already looking around for external investment. Two of the top firms say it is likely that they will receive financing in the next five years, and are considering a public floatation. The survey was conducted by Smith and Williamson, an accountancy and investment management group.
The purpose of the change in the law was to promote competition and improve access to legal services in the UK, by making it as easy to buy a will as it is to buy a can of beans.
Giles Murphy heads up the professional practice team at Smith and Williamson.
"Our results suggest that 30 per cent of the UK's top 40 law firms may try to join forces with a non-legal practice within just two years."
"This would transform not just the legal landscape but the provision of professional services across the UK," he added.
Since the law came into force last year there have been a number of small moves but nothing revolutionary just yet. The most notable was that of Parabis, who accepted a £50m external investment which it said it would use to buy out other legal firms.
There are signs however that market changes are gathering pace. In the past fortnight Quindell Portfolio, an AIM-listed outsourcing company announced that they are to pay £19.3m for a Liverpool-based legal firm specialising in personal injury.
In the same period Slater and Gordon, a law firm based in Australia announced that it would buy Russell Jones and Walker, which has a large personal injury division and head offices in London for £53.8m.
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