Global Law Firms Conclave

Bhubaneswar

10 August 2015

When the Revolution Comes:

Innovation and Regulated Disruption in

the Legal Services Market

Julian Webb

1

Regulatory reform

• Key driver: national and supra-national

competition policy (trade in services)

• Competing models of legal services

regulation:

– Professional-independent

– Consumer-competitive

• Rethinking how legal services regulation

functions in the public interest

– Greater emphasis on external regulation

– Enhancing competition in the consumer interest

• Regulation as a tool of creative disruption and innovation

Australia 1990s to date

• Federated system, so a mixed picture, but…

• Moves towards independent oversight/co-

regulation

• Authorisation of new business models (MDPs

and ILPs)

• Harmonisation of laws to facilitate multi-state

practice (now new LPUL in Vic/NSW)

• Use of ethics audits and other new regulatory

tools to encourage good business practices

England and Wales: Legal Services Act 2007

• Market liberalisation rather than deregulation

• Dual system of oversight and frontline regulation, with separation of regulatory and representative functions

• Complex regulatory system of multiple regulators with mix of individual and entity regulation

• Facilitates a limited market in regulation (regulatory competition)

• “ABS”: Relaxation of ownership rules for law firms and facilitation of MDPs : over 300 ABS in England now

• Focus on risk and assuring competence: increased significance of internal (firm-level) compliance structures and on relevant continuing education and training (LETR)

Introduction of regulatory objectives (s.1)

(1) In this Act a reference to “the regulatory objectives” is a

reference to the objectives of—

(a) protecting and promoting the public interest;

(b) supporting the constitutional principle of the rule of law;

(c) improving access to justice;

(d) protecting and promoting the interests of consumers;

(e) promoting competition in the provision of services within

subsection (2);

(f) encouraging an independent, strong, diverse and effective

legal profession;

(g) increasing public understanding of the citizen's legal rights

and duties;

(h) promoting and maintaining adherence to the professional

principles.

Is it working?

• Very little research data so far

• Slater & Gordon (Aus)

– National personal injury/private client firm; first law firm to

float as public co.

– Expansion into UK market in 2012; now 7th largest

international law firm in the UK with revenue exceeding ₤100

Million

• Riverview Law (UK)

– Established 2012 converted to ABS in 2014

– Fixed-price “managed service solutions” to commercial

sector

– New ways of working with clients

– Heavy investment in new technology and R&D

Dividing the profession?

• Opportunity or threat?

• Will it happen anyway?

– Disrupters testing the limits of regulation

• Legal infomediaries: Legal Zoom/Rocket

Lawyer

• Supporting the in-house function: Axiom (US)