Legal Services Bill could mean big changes for law firms as insurers get involved
The new Legal Services Bill could spell the end of the high street lawyer as we know it, say experts.
As companies within the insurance industry look to acquire law firms or at the very least, invest in legal services under the new bill, small law firms face the risk of becoming obsolete, said Hugh Price, head of business litigation for Hugh James.
He said: “My gut feeling is that there will be big changes in the next two to five years.”
Price said it will be the medium to large sized firms – many of which have invested in strong IT systems – that will be most attractive to the financial sector.
He said: “We could see a move towards the merging of smaller firms or their demise.”
The bill –resulting from a review conducted by Sir David Clementi in 2004 – will allow law firms and non-law firms to form partnerships and companies and sees the creation of an independent oversight regulator called the Legal Services Board.
Since then, numerous companies within the insurance industry including loss-adjusters and brokers have expressed interest in acquiring law firms.
The hefty investments made by insurers and other corporations could lead to less face to face time with solicitors as more firms move to towards more online systems.
Some legal services, such as the drafting of wills, can easily be provided online, reducing time and cost, added Price.
With the investment by large financial corporations, law firms will be able to adopt more efficient technologies that would reduce costs for clients and insurers would be in a position deliver legal advice more promptly, agreed legal expense insurer DAS’ Kathryn Mortimer.
Insurers on the other hand could potentially reduce their own legal bills by reducing third-party panels of solicitors.
Claims settlement time could also be diminished as insurers would no longer have to refer policyholders to external firms for advice.
Legal expense insurer DAS has already claimed it will be buying small independent Bristol law firm CW Law but experts predict we won’t immediately see a flood of acquisitions as it is a costly and potentially risky endeavour.
