The Act allows external investment and ownership of law firms, allowing lawyers and non-lawyers to share the management and control of a business which provides reserved legal services to the public.
Malone, executive chairman of directly authorised club PMS, said it will mean the rise of “pile ‘em high, sell ‘em cheap legal services” on offer from big consumer brands. The result of this could be more financial advice companies seeking to offer legal services to chase profitabililty.
While Tesco has said in the past it has no plans to launch into legal services the shift has been dubbed “Tesco law” and is widely applied to the idea of mass-market legal services.
Malone said: “I see larger firms like Sesame Bankhall starting to offer their members access to legal services like probate, estate planning, inheritance tax planning and will writing – that’s where the money is.
“Especially as we move over to a post RDR world, widening what advisers can help their clients with is going to be important. With Tesco law coming in it will give advisers a much more connected proposition.”
Eddie Goldsmith, senior partner at conveyancing solicitors Goldsmith Williams, agreed that the Legal Services Act would change the way legal services were offered.
He said: “Conveyancing at the moment is like a big cottage industry with around 7,000 firms all doing a bit of conveyancing and perhaps 300 bigger firms focused on it.
“The Legal Services Act is intended to open up the legal field and promote competition to benefit consumers.
“There’s certainly scope for big brands like Virgin Money, Tesco or Co-operative to come in and upset the existing legal market by offering a good service for consumers.
“What I call the big ugly brands will turn the market on its head. I would take this as a wake-up call for solicitors – competition is going to get much tougher in conveyancing and estate planning.
“It makes sense for networks and mortgage clubs to have legal services in their future. It will allow them to keep brand control over more services which they might have referred in the past.”
A spokesman from the Law Society said: “[The Act] will mean there are probably more legal services providers in the financial services field and some markets might become even more crowded, such as conveyancing where there are already solicitors and others providing services.
“Part of the reason we launched the Conveyancing Quality Scheme, which solicitors have to apply to become a member of and then go through a rigorous assessment before securing membership, at the start of the year was so that consumers would be able to identify the firms which had been recognised as providing genuinely high quality.
“They will be more easily identifiable in the crowded market.”
The Legal Services Act follows a government-commissioned report by Sir David Clementi The Legal Services Review published in 2004, which argued that external ownership of law firms should be permitted in a regulated environment.
The report came after an Office of Fair Trading investigation into competition in the professions in 2001.
The Solicitors Regulation Authority will be responsible for regulating non-lawyers involved in ABSs, using the same criteria to assess character and suitability as it uses to asses solicitors, bar the need for legal competence or qualification.
Last week PMS’s parent company Sesame Bankhall Group appointed a legal panel consisting of Optima Legal, Shoosmiths, Breeze & Wyles and O'Neill Patient to equip advisers with the tools to assist in the legal protection of their clients’ wealth.
Sesame’s service will initially focus on conveyancing, with further phased developments taking place that will provide all-encompassing client wealth protection services, including will writing, trust deed production, probate, estate and trust administration, powers of attorney and the provision of other legal advice required by clients and their families.