Alistair Morris, Chief Executive of Pagan Osborne says firms should embrace modernisation

The legal profession is going through unprecedented times. The current economic crisis has hit many firms. Falling income and redundancies are a fact of life and the pressures we are all facing, from partner to trainee, are compounded by a changing marketplace and moves to reshape the profession into Alternative Business Structures (ABS).

Whilst not wanting to underplay any of these challenges, present times illustrate just why modernising the profession is so important. The Government’s consultation paper, ‘Wider Choice and Better Protection’, has set the ball rolling and if this is to be a pivotal point in Scottish legal history, then let’s embrace it and mould our future to be one of greater opportunity and prosperity.

ABS will allow non-solicitor shareholders external investment and ownership of legal firms and the formation of multi-disciplinary practices. It will also completely change the role of partner. Big changes, but certainly not something that needs to be feared.

It surprises me therefore just how many young solicitors are fearful about ABS. Many aspire to the status of a traditional partner and the prospect of ABS seems to bring with it a dread of missing out on partnership meetings, reporting to a non-legally trained manager or director and competing with other non legally qualified personnel for a limited number of positions.

I think that this is to misunderstand the real potential of ABS to harness different skills, to make a firm more competitive (and therefore successful) and ultimately open up avenues for young lawyers to develop broader business skills and become partners (albeit without the necessity of an equity stake) far more quickly.

The partner of a firm has the expertise, the client base and the prestige. So why not have lots of partners? We don’t question a doctor about his or her equity stake in a surgery, but respect their position and expect a good diagnosis. It could be the same for partners in a well run and highly regarded legal ABS practice.

Traditionally there are two types of partner: a fixed share partner paid a salary and an equity partner, who receives a share of the profits. In progressive, larger firms there are also team leaders in different areas of the firm, allowing young associates to develop management skills and leadership potential.

In the new world of ABS I can see this developing further, allowing more people to become ‘partner’ whilst continuing to provide a quality service to their clients without the need to gain skills that would perhaps be better left to other professionals. In these new organisations, partners in the business will be responsible for developing expertise and strengthening client relationships. They may or may not also have equity participation.

The ABS model will also bring with it modern management. It will encourage people to work in a team-oriented environment, as opposed to the embedded ‘I am a partner’ way of doing things that still exists in many firms. The demise of the traditional partnership structure will also make it easier for younger lawyers to carry some influence.

ABS will help to instil an organisational rather than an individual culture that encourages brand values, a firm-wide ethos and a way of working collaboratively which I believe will raise the status of the profession rather than diminish it.

Another of the great fears around the introduction of ABS is regulation. At present a legal firm is not regulated; the individuals are. Because the society can only control lawyers, there is an additional onus on the lawyers, as opposed to the non-lawyers working at the firm, to supervise. If a non lawyer makes a mistake the society has sanction only over the supervising lawyer. Under any new regime, however, the entity will also be regulated and that will create a far healthier system.

As an illustration of the limitations of the existing partnership model there is currently nothing to stop the partners withdrawing resources from training and personal development to secure greater profits for themselves. Good sense would hopefully mean that this seldom happens, but if it does the law society can do little about it.

In a regulated entity business model, where there is a broad base of shareholders demanding longevity of business, training and development are essential and unlikely to be curtailed for short term gain. And, should the firm as the regulated entity have multiple claims made against it the society can then take action to close the firm down.

Many of the practices that will be brought in as a result of the introduction of ABS are already well established in business. Many firms already harness non-legal skills that enable them to react to market opportunities and threats. We have directors with experience of different professional backgrounds and give them the status and authority to put their skills into practice.

We also operate more flexible structures to support and speed up the career paths of our talented trainees and associates, not because we have to, but because we want our lawyers to be ready for the real challenges they will have to face when handling our clients’ business.

By opening our minds to a more modern way of doing things, we give the profession more room to grow and our lawyers more room to thrive. Modernisation is not something to fear.