Tesco law is a welcome shake-up to the industry
Last week, Premier Property Lawyers became the first Alternative Business Structure (ABS) in the UK when, on October 6, the tight ownership restrictions on legal businesses were relaxed and outside investment in law firms became possible.
The change has been dubbed “Tesco Law”, because it paves the way for supermarkets (Co-op has already made clear its intentions to become an ABS), banks and other high street retailers to offer legal services to customers.
There has been much speculation in the weeks and months leading up to the change about whether High Street law firms should be worried about or welcoming Tesco law.
Accountants and financial planners, Old Mill, who work with a number of law firms in the south west, say their legal clients are not worried about the so called ‘impending doom’ with some actually looking forward to the introduction of Tesco law, calling it a welcome shake-up to the industry, as Craig Howes, Director of Business Services explains.
“There are going to be a number of firms that will go to the wall now that Tesco law has come in, but properly run law firms will be quick on their feet and think strategically, and will be making the most of what is actually a real opportunity to shine, like Somerset law firm, Dyne Drewett and Dorset based practice Pengillys.”
Justin Hopkins a member of the management team at Dyne Drewett says Tesco Law is what the industry has been waiting for: “There is a lot of suggestion that, because of Tesco law, the traditional practice is doomed, but to be honest, I have been looking forward to Tesco law!” he said, “I really am quite excited by it as I think it is going to change the industry for the better.
“Tesco Law will allow these ABSs to take more simple and straightforward type of work, make it cheaper for the consumer, which will be popular with people trying to save money, and firms like us can concentrate on excellent service and the specialist areas that we excel in.”
Craig says he thinks it is difficult to know what is going to happen in the long term, as it is all so new, but agrees with Justin, “I think it is likely that certain work will start to leave the law firms as they will get beaten on price, but the areas where service is more important will stay with the specialists,” he said.
Chris Berry, who is a Principal at Pengillys agrees that this is the most likely outcome, “inevitably, there is an element of worry about the unknown, but I think we will just have to wait and see, and we intend to be positive.
“I think it is likely that Tesco Law will create large national law firms, in the same way large national estate agents were created 20 years ago. This is not necessarily a bad thing and will make some legal services more affordable for people.”
Chris says Pengillys are not particularly worried because they don’t think the service ABSs are going to offer will be in direct competition with them.
“They will probably be big national set ups, offering cheaper services on things like low value property sales. We offer a wide range of services with recognised specialists in many areas including IHT, family law, injury law and commercial property and we are local, concentrating on offering a personal service. I’m not saying places like Tesco and Coop will not offer a service, but it just will not be personal,” he said.
But despite the fact neither Dyne Drewett nor Pengillys are particularly worried about Tesco law, they are certainly not resting on their laurels.
“Our prime objective is to be excellent at what we do and be as profitable as possible, and we will do what we need to do to achieve that, and if that means becoming an ABS, and joining forces with say accountants or surveyors, then we would consider it,” says Justin.
“But for now, we are concentrating on areas we have carefully considered to be away from the Tesco law risk, for example, agricultural, commercial litigation, planning, and have 10 new lawyers who are specialists in these areas.
“We know Tesco law will take some business away, making it cheaper for the consumer, and good luck to them, but firms like us will always have the upper hand when it comes to quality.”
Chris says Pengillys is also prepared to change, “we are led by the client and will continue to be, offering the services our clients want,” he said, “and if Tesco law shows us there is something we are not providing and should be, because our clients require it we will react to that.
“We have discussed and considered general plans for expansion, subject to the economy, and becoming an ABS with perhaps an estate agent, accountant, barrister or surveyor, is something that is under consideration.”
Craig concludes, “for some law firms, Tesco law is bad news, but those, like Dyne Drewett and Pengillys, that are dynamic and creative will be the ones that will survive and thrive. For some, that may mean dramatically changing the way they do business, and Old Mill can help them at every step of the way.”
