Alternative Business Structures in the Legal Services Sector

Researchers at the University of Leeds are at the forefront of building understanding of the new forms of business taking shape in the legal services sector.

One of the most dramatic changes to legal services in recent years has been the 2007 Legal Services Act; one of the key reforms of which was the licensing of new forms of businesses to deliver legal services. The ‘alternative business structure’ or ABS allows non-lawyers to hold equity in the firms altering the ownership structure in the sector from the traditional partnership model. Since the first ABS registered in October 2011, numbers have grown to around 250 – still a small percentage of law firms overall, but as the UK is a global leader in the provision of legal services the impact of these radical changes is being closely watched, not just at home but worldwide.

These changes in the legal services sector are a vital area of interest to both the legal services industry and to academics specialising in this field, as these changes have implications for the leadership and management of law firms and for talent and recruitment strategies. Working alongside colleagues from Leeds University Business School and School of Law the Professional Services Hub is helping build engagement between legal practitioners and academic experts; encouraging knowledge exchange to build a better understanding of the impact of new regulation on the industry.

With little research conducted on ABSs to date, Dr Sundeep Aulakh and Professor Joan Loughrey from the University of Leeds have set out to map the impact of these changes. The Professional Services Sector Hub received funding for Dr Aulakh, through a fellowship from the Economic and Social Research Council (ESRC) and the Society for the Advancement of Management Studies (SAMS), to undertake a two-year study.

“I’m firstly mapping which firms have chosen ABS, what structure they use and what segment of the market they cover,” explains Dr Aulakh. “I will identify particularly innovative ABSs which I’ll then work with in depth, to understand how the ABS model affects their organisation and, from that, look at the impact on the profession as a whole.”

One of the potentially most significant changes to the legal services sector as a result of the Legal Services Act could be the entry of the ‘Big Four’ accountancy firms into the market.  The first ABS to offer both legal and accountancy services was licensed by the Solicitors Regulation Authority in 2013, and research by the ICAEW’s indicates that around 100 accountancy firms might seek accreditation as ABS’, potentially including high profile accountancy firms such as Ernst & Young, PwC and KPMG.  Dr Aulakh said: “Most law firms have been dismissive of ABS so far but they are now starting to take notice of what is happening.  The arrival of the global accountancy firms will disrupt the legal sector but not for a long time. These are radical reforms but the pace of change is quite slow. It is having an impact but it will be slow and evolutionary.”

Read more about Dr Aulakh’s research into the entry of accountancy firms into the legal services sector market on the Yorkshire Post website.  

If you would like to consider taking part in this research, hear more about the findings or know more about the work of the Hub, contact Alistair Hay ( / 0113 313 1909)

Join the conversation on Twitter

Read more about: