Laying claim to "first" international law firm to get licence, firm says regulatory approval enables broader client services, attracts top talent and is more agile.
Reed Smith has announced that it has become the first international law firm to convert to an Alternative Business Structure (ABS), after receiving approval from the UK’s Solicitors Regulation Authority (SRA).
“Forefront of modernisation”
Unlike the traditionally regulated law firm model, the ABS permits law firms to be managed and/or owned by individuals who are not legally trained, to provide services beyond traditional legal advice and even to receive external investment. This means, in part, that such firms can benefit from talent within their partnership from any field and thereby amass a wider range of commercial acumen and technical expertise to support clients. The ABS conversion is a change in regulatory status that has no impact on the existing corporate structure of the firm. Reed Smith remains an LLP, although its membership will include a corporate vehicle. It applies to the firm’s UK LLP incorporating partners in the UK, France, Greece, UAE and China. The firm’s single partnership and single global profit pool will remain unaffected. Tamara Box, Reed Smith’s EME managing partner, said “We are incredibly proud to be at the forefront of modernisation of big law. As the first international law firm to convert to an ABS, we are future-proofing our business and now have the agility to immediately seize new opportunities – in tech, big data and other specialised consultancy services – that will help us drive our clients’ businesses forward.”
Black letter law
Ms Box explained, “Our clients’ needs have changed. In this era of digital transformation, they are looking for a strategic service provider that can go beyond just providing advice on the black letter law but rather one that can assist in solving any challenge they face to help them achieve their business goals.” She added, “Whether that solution comes from individuals with a legal background or not is irrelevant.” The introduction of the Legal Services Act in 2007 first enabled UK law firms to convert to ABS. In the United States, only in Washington DC are individuals without legal qualifications allowed to be law firm partners, but states such as California, Utah and Arizona are pushing for regulatory reform to permit ABS models. Andrew Jenkinson, Reed Smith’s London office managing partner, commented “As some states in the US look to replicate the possibilities provided by the ABS model, we are excited to be at the vanguard among international firms in this wave of legal sector innovation.” He added, “Our clients are increasingly asking us to help them future-proof their businesses and plan for the next five to 10 years. It’s our responsibility to do the same for our own business.”