Legal market regulation in the UK is on the way to significant liberalization. It will be interesting to see if that affects the development of online legal services.
Government to implement key Clementi reforms in LegalIT (March 21) reports that the British government will move to adopt the Clementi Commission recommendation that “will allow outside investors to own law firms and other professionals to form partnerships with solicitors.” Public offerings are not out of the question.
Assuming this does move forward and corporations or shareholders can own law firms, then outside capital may lead to innovation in legal services. Investors who see opportunities to rationalize the provision of legal services could invest in law firms and fund development of technologies that would significantly alter current practices. For example, one reason for the relatively slow uptake of online legal services may be the lack of capital to pay for lawyer hours to develop fully-featured systems. If so, the outside capital allowed by relaxed regulations could lead to more online services, if not from the large firms then from mid-tier firms that receive outside funding.
The same logic could also lead to other changes in practice. Investors may see other inefficiencies – for example, the billable hour – and fund firms with the goal of changing current practices, eliminating inefficiencies, gaining market share, and earning sizable returns.
All this is speculative, but assuming the British government moves forward, we could see some previously unimagined changes in the legal market.