Will Alternative Business Structures cross the pond?
Today marks a major milestone in American history as the world braces itself for Donald Trump’s reign in power at the Whitehouse.
With an American businessman who shaped the New York skyline, and arguably the world’s most recognised entrepreneur in power, there are many unanswered questions about the impact his inauguration with have on the economy and how this could impact on American’s legal sector.
David Beech, CEO for Knights Professional Services discusses the reluctance of the American legal sector to embrace the Alternative Business Structure (ABS) in light of the shifting political landscape in The Digital Edge podcast How alternative business structures (ABS) are working in UK law firms and will they cross the pond?
“In the UK, around 600 Alternative Business Structure (ABS) licences have been granted since they were established in 2012. Yet only around 25 of these law firms have truly embraced the opportunities it brings for business growth,” said David.
“Some law firms have appointed finance directors to join the management teams, but very few have secured external investment and made significant changes to their business model.”
Having trained formally as a lawyer before moving into private equity funding, David Beech was the first CEO within the legal sector to secure an ABS licence on behalf of Knights Professional Services.
Since then Knights has become the fastest growing regional professional business, now achieving a £40 million turnover with more than 500 professionals working across six regional offices.
“American law firms are very reluctant to embrace the ABS culture, but I think it’s a defensive reaction to feeling threatened by increased competition.
“Knights wouldn’t be where it is now without external investment; it allowed Knights to operate as a business, rather than a traditional law firm and we dramatically cut overheads and increased profit as a result.
“It allowed us to implement a paperless system and new technologies which now enables our lawyers to prepare and send a client invoice in less than three minutes.
“With fewer secretaries, we’re working as a lean organisation which encourages a culture where lawyers are empowered to generate their own invoices and drives efficiencies so everyone can share in the profit.”
David further explains that all professionals receive client management training and Knights has recruited more than 140 paralegals in the last 12 months who have a large share in the lower level work but are immersed in the culture where everyone works as a team, rather than within a hierarchical structure.
American firms are adverse to ABS claiming that there is a conflict of interest that could lead to less emphasis on legal ethics. David disputes this as ‘rubbish’. “Ethical compliance is greater now that managers monitor it. Without strong ethics, the firm brand – and therefore business – would suffer.
He adds: “Change doesn’t come easy. Winning hearts and minds is a long-term and ongoing process. American lawyers seem to see ABS as a threat to their profession and seem blind to the opportunities offered by an ABS license.”
Follow the link to listen to the podcast. http://legaltalknetwork.com/podcasts/digital-edge/2017/01/will-alternative-business-structures-u-k-law-firms-cross-pond/