Clare Burnett

Member Article

Legal sector changes prompt Armstrong Watson expansion

Accountancy firm Armstrong Watson has invested in its specialist legal sector team to meet growing demand due to changes in the legal marketplace.

The firm is placing further investment into its existing legal team to support even more clients in one of Armstrong Watson’s fastest growing sectors. Inga Morkunaite, a three year post qualified accountant, has joined the firm’s Leeds team as Legal Sector Senior alongside Mark Baines and Olivia Safhill, specialising exclusively in acting for lawyers.

Recent changes in the law have provided both threats and opportunities to the legal sector, and in Leeds where there is a huge legal presence on the market place, these changes are more clearly in evidence.

In brief, changes to the law include:

  • Legal Aid reforms – after a government cost cutting drive. This means a lot of work which was previously covered by legal aid is now being cut and people are having to pay privately.
  • Personal Injury reform - lawyers are now banned from buying cases in by paying a referral fee.
  • Referral fees banned - changes the way lawyers are paid. They are now not allowed to charge success fees, but must take their fee out of damages. This reduces the value of income per case which is leading to huge consolidations within the legal marketplace particularly in personal injury firms. They have to take on such a volume of cases to make sure they pay.

Bdaily talked to Andy Poole, the firm’s Legal Sector Director, a 10 year veteran supporting the legal community who is responsible for the expansion of the team at team Armstrong Watson since joining the firm 3 years ago. The team is now the biggest of its kind in the firm.

He said: “In terms of competition, we’re seeing the likes of BT and AA coming in as well as Slater and Gordon, a listed law firm from Australia coming over here looking to buy up practices.

“This is creating a state of flux in the market, where law firms are providing services in a slightly different way to clients and the traditional law firms are having to look at that. They must either match these services or differentiate themselves from the competition. They need a lot of strategic support in terms of how they deal with that flux in the market.

On changes in legal culture as a direct knock on from government changes such as the Act, Andy says “A lot of younger potential legal clients are attracted by quick online service offered by start up firms like Brilliant Law (from Bert Black, founded BetFair, a start-up offering fixed price services to clients rather than an hourly rate) They’re used to buying things on the internet, and so it becomes much more efficient to obtain legal services that way.

“A lot of traditional law firms don’t want to take this route. They want to differentiate themselves by still providing quality face-to-face service. Though obviously firms like Brilliant Law would say they still provide that service in a different way.

“One of the reasons Armstrong Watson are growing so much and we’re getting so many new appointments and having to recruit, probably even more in the new year, is because we understand all the changes and because we’re unusual in that we have a team of people that do nothing but advise lawyers.

“We are aware of all the issues and can help firms respond to these changes and therefore we’re getting a lot more appointments on the back of that.

“Firms are realising that because we know their sector and we speak their language we’ll be able to advise them better.

Andy was also asked if there was still a place for traditional law firms with the advent of modernised ventures such as Brilliant law. He said: “I think there’s still a place for traditional law firms, for everyone. The industry has gone beyond a 9-5 to almost a 24 hour industry. Firms that close over lunchtimes are the firms that are disadvantaging themselves.

“However there’s still a difference between a sophisticated buyer and a first time buyer, who has never used legal services before and who will Google a legal provider.

“I think there is still room for all types of firms, but they have to be able to differentiate themselves, and be clear on what their strategies are, and why they are providing their services in the way they do.

“There are a lot of law firms that are struggling. A big part of what we do is go into firms to improve them. There are a lot of opportunities, but there are a lot of threats in the market at the moment and law firms are closing.

“There is a risk because of these changes to the market. That’s why we might see a lot of mergers in the future, smaller firms that, as part of their survival strategy, merge with larger firms. At Armstrong Watson, we are well placed to deal with these changes. We are experienced in aiding in law firm mergers.

“We see our position in the marketplace as being there to help firms deal with these issues in a transitional period.

“In the whole country there’s probably about 4 or 5 firms who do what we do. It is these firms that are the best placed to deal with these transitions, with the best track record, and who are able to adapt to these changes and benefit from them the best.”

Armstrong Watson have a network of 15 offices throughout the north of England and south west Scotland, with 33 partners and over 400 team members.

This was posted in Bdaily's Members' News section by Clare Burnett .

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