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Solicitors will have to battle it out with banks, supermarkets and insurance companies for legal business from Q4 next year, leading some to suggest they will be more eager to link up with financial advice firms.
According to SIFA, the Legal Services Act's Alternative Business Structures (ABS), which the Government comfirmed will come into force on 6 October next year, means solictiors will "have to be more receptive to dealing with IFAs".
The ABS part of the Act - branded the 'Tesco Law' and the 'solicitors' RDR' - will open the "closed shop" of legal services to other providers such as banks and supermarkets.
Law makers hope the move will broaden consumer access to legal services, but law professionals argue it could lead to a 30% reduction in the number of practicing law firms.
SIFA says entrepreneurial financial advisers should now engage solicitors, offer them skills in building client relationships and gain valuable professional connections and new business in the process.
"Many [solicitor] firms will need to take a wider view of their clients' needs and consider strategic alliances with other professionals who possess complementary skills," SIFA says.
According to the group, IFAs have in the past found solicitors reluctant to refer clients due to negative ideas of advisers as salesman with a low level of professionalism.
However SIFA development director David Seager says the announcement of the implementation date for ABS, coupled with the drive for professionalism within financial services brought on by the RDR, will drive solicitors to seek out professional link-ups.
"I would love to say solicitors are now more receptive to doing business with IFAs," he says. The truth is solicitors now have to be more receptive to dealing with IFAs.
"For solicitors there are quite a lot of scary changes coming up. So this is the time, if you are a professional IFA, to be speaking to solicitors.
"Most of the new firms we have joining SIFA are professional IFAs who want our support in developing relationships with law firms."
In an echo of the challenges faced by advisers ahead of the RDR, SIFA says many law firms will be driven up-market by the Legal Services Act, to areas where the value of their technical expertise will be rewarded.
In another dovetailing between the two professions, solicitors will also have to overcome the negative perceptions associated with the solicitor brand - namely that solicitors are interested only in "matters", not in client relationships, and are not concerned with clients' wider professional needs.
"For most firms, some form of strategic alliance with an IFA firm may be the way forward, possibly taking the form of a closer referral relationship or a joint venture", SIFA says in its members' bulletin.
SIFA advises solicitors to satisfy themselves IFAs are fee-based and are well scored for independence, required by the Solicitors Regulation Authorty, before entering into alliances.
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I don't believe it!
I do see Adrian Seager’s point and hope SIFA will clarify this. A good association with a solicitor is always desirable, but does anyone really think the legal profession is worried if Banks, Supermarkets or Insurance companies try to muscle in on their territory? My guess is that will be absolutely delighted as they will most likely be inundated in malpractice suits against these entities. You only have to compare what a mess these outlets make at present when they venture into the IFA space. Anyway would any member of the public be so daft as to entrust their legal matters to any one of these three institutions. (On second thoughts – perhaps they are that stupid!).
Posted by: Harry Katz
Don't count on it Harry...
Look at the Veterinary profession. A few years ago the government did something similar so that vet practises could be owned by companies and other individuals rather than just vets all in the interests of competition. (ie big profits for PLC's). Exactly the same pompous attitude from the vets - they won't succeed, but they did and in many areas drive out the smaller operators who can't compete or they buy them out. Typical Tesco model, still vet jobs out there but it will be for Pets PLC or whatever on a much lower salary and longer hours. Once the competition has gone, up go the prices with ethics sidelined to the minimum accceptable.
Posted by: PI1010
Independence
I am not where the expression 'Well scored" for independence came from exactly but ist is not a phrase SIFA have used. However SIFA has has always stood up for true independence as our years of campaigning against SJP will evidence and solicitors can only refer to IFAs. For us at SIFA we look for primarily for RDR style standards now. we feel that working on a fee or CAR basis is critical along with advanced qualifications.
Posted by: Dave Seager
amusing
As an IFA practice and large mortgage broker, it's unlikely we will be teaming up with any solicitors practice soon. They need to increase their ideas on professionalism and custromer service. I've yet to find any solicitor that offers the same level of service as ourselves and it's not about how you charge but what you do and how you do it. And as for hypocrasy, solicitors charge commission, see any will trust where they are the trustees and it's likely to charge a % fee. Solicitors will continue to give crap service and the suppermarkets will take over in the end. But maybe there's an opportunity to get a solicitor into my IFA practice and teach them about customer service and how to give it.
Posted by: Chris Glen
Solicitor's & ABS
The best way to find out what solicitors are thinking about ‘Tesco law’ (ABS) is to read their own press, from where you will quickly realise that their overriding concern is the potential loss of their conveyancing gravy train from bulk conveyancing. The impression I get is that they are running around like headless chickens muttering mantras like “we must be more commercial”. There is absolutely no evidence that they are even remotely thinking of diversifying into IFA areas of activity. Where I detect any strategy at all, it is to diversify into estate agency, which it seems to me is more an opportunity for pure protection IFA’s rather than the sort of activity that is likely to interest the likes of Harry Katz. Indeed, the relaxation of the legal defences erected in times past to protect solicitor’s monopoly of such things as probate and estate administration, wills, trusts etc is more an argument for IFA’s adding these lines to their practices and for an incursion into those traditional solicitor’s areas than the other way round! Now is the time to dip our bread into this transactional work gravy, containing little if any law.
Posted by: Greg Thomas
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What does SIFA's "well scored for independence" mean? I hope that was not some sort of political speak used to blur the distinctions of independent and tied, which would be great for certain large firms who once had releationships with solicitors, and now unable to do so. Or am just being cynical.
Posted by: adrian seager