IT IS called Managing for Success 2005 but perhaps they have got the title wrong. This Thursday’s conference of the Law Society’s law management section, sponsored by The Times, focuses on the world beyond the regulatory review of legal services by Sir David Clementi. Maybe it should have been titled Managing for Success 2008 (or even 2010) because that is the kind of timescale that is realistically involved here.

The review, which covered issues of regulation, partnerships and ownership of legal practices, has been welcomed by the Government. The implication is that it will be implemented in full. But not everyone is so sure. Keen supporters of the changes envisaged by Clementi, such as Jonathan Gulliford, head of legal at the RAC and a speaker at the conference, see potential for slip-ups in the months ahead.

“The likelihood of an election, changes at the Department for Constitutional Affairs, a reduced majority and the number of lawyers in Parliament mean that I am not yet convinced that all will run smoothly,” says Gulliford, who may be seen by the audience as a threatening ogre or a friendly giant. “There is bound to be opposition to some of the more radical proposals, notably around issues of external ownership of legal practices. I don’t believe yet that it’s a done deal.”

Sir David has been playing his cards close to his chest, unwilling to say whether he thinks that his recommendations will get through unscathed. However, plenty of other people are keen to pass judgment on the significance of what is proposed.

“It’s not one of those reports which has got everyone leaping around,” says Peter Martyr, chief executive officer at Norton Rose. “I don’t think that it will make a big difference to the way we operate.”

Others are not so sanguine, envisaging a brave new world of “wrap-around services” and call-centre-based operations where advice will be on offer at £50 a throw.

According to George Bull, partner at the accountants Baker Tilly and a conference speaker on the financial implications of the reforms, the legal profession is now so diverse that the impact of Clementi will vary widely. For a minority of top firms it may have no impact either way. For others it will open up fantastic new opportunities. But for some the consequences could be ruinous if they are left behind in the race to modernise, invest and streamline.

Another speaker, Professor Stephen Mayson, director of the Centre of Law Firm Management at Nottingham Law School, agrees. “Those who bury their heads in the sand over what is proposed may come unstuck,” he says. “The firms who are not interested in taking advantage of the opportunities opened out by Clementi may find that they are losing market share to the slicker, better resourced, outfits who do. The report is a wake-up call on the need to become properly structured and better managed.”

Simon Young, the Law Society Council member who will chair the conference, also highlights the risks of ignoring what is happening. “There are a lot of lawyers who are very slow to take on board the implications of the Clementi proposals,” he says. “They may face a rude awakening. The hungrier firms will take advantage of what’s available. It will be rather like the move to LLP (limited liability partnership) status. At first it was the smaller firms who made the move. Now lots of major firms are doing it.”

John Spencer, a partner with Shoosmiths, acknowledges that the profession will not be affected equally but that some sectors, such as the legal expense field in which he works, may undergo reorganisation and refinancing. External funding would relieve the pressure on working capital, and there would also be greater scope to exploit firms’ strengths. Whether individual partners would be better off is a moot point. The external investor would expect a return. But the benefit could be lawyers being able to focus on providing a service rather than having to worry about personal risk and the financing of the business.

Tony Williams, of the legal management consultancy Jomati, reckons that major changes in the legal market, such as the increasing muscle of the US firms, the tendency towards consolidation and the pensions predicament of partners aged 50-plus, may make render even some City firms more open to change than they yet appreciate. “Bear in mind that the unthinkable does happen,” he says, with all the experience of someone who used to be the boss of Andersen Legal.

What most people agree is that there is unlikely to be a rerun of the estate agency fiasco of the last century, where building societies moved in to buy up agency chains, enabling partners to make a financial killing — only for the businesses’ value to collapse almost immediately. A more likely scenario is that organisations such as the RAC will start their own law firms. They would offer a wide range of services, building on their motoring brand, but also covering consumer disputes, personal injury and related work. They would cherry-pick the best lawyers — probably the younger ones — and build their own culture for a fresh form of legal service provision. Williams is sympathetic. “After all why would they want to buy a dysfunctional law firm?” he asks.

Good question.

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