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Buy a divorce … at a supermarket near you

YOU know the kind of place: a secretary frowns through half-moon spectacles at anyone walking into the dusty, waiting room where dog-eared National Geographics languish.

The cobwebbed walls are nicotine yellow and a distracted little man with a paunch emerges from behind mottled glass, peering at some writ as he hands over a document for typing.

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By the time the secretary finally calls your name you have almost forgotten why you came in the first place.

This might not reflect the majority of firms of high-street solicitors outside Scotland’s cities, but you don’t have to go too far to find one that approaches the description. Some would protest that they have a certain charm, particularly compared to the cold shiny world of mobile phone stores or travel agents. They have somehow endured while many other service providers have had to move on. Yet trend-watchers are wondering whether this can continue much longer. Looming like a rather apocalyptic shadow is the Legal Services (Scotland) Act 2010, which when it comes into force next autumn will allow supermarkets and other non-legal firms to compete with solicitors for business for the first time. Two years after the profession narrowly voted in favour of these changes, with solicitors already toiling under a general drop in business, many are now wondering what will be left once they come about.

They won’t have to wait until next autumn to find out, however. The advance guard, which is called Quality Solicitors, will be entering the market in January. Based in Leicester and already with 220 branches in England despite only launching last May. The company was set up by Craig Holt, a barrister who was unimpressed with the firms in the town when he moved there from London several years ago. Realising there was a gap in the market, he is now seeking to build the first truly national high-street solicitors brand.

Rather than setting up a giant firm from scratch, QS works by inviting existing firms to pay to become franchisees. Each participating firm must put the Quality Solicitors brand above the door and use the same marketing materials; centralise the buying of everything from IT services to legal books; and submit to QS service standards, which includes opening on Saturdays and having a fixed pricing structure. In return, they get support from the Leicester mother ship and a berth in its local WH Smith, through which to lure customers. Having raised a rumoured £20 million to finance quick growth from Palamon Capital, a London-based private equity house, several months ago, QS is aiming to have 1200 branches throughout the UK by the end of next year. The Scottish wing of this blitzkrieg involves opening between five and 10 branches in January in Glasgow, Edinburgh and elsewhere, and having 200 by year end.

“I make no bones about it that we think that we can take a dominant share of the consumer and small business legal market in Scotland,” says Holt. “Solicitors should be worried, at least the ones that we are not working with.”

He contrasts the legal sector with the opticians’ market, which was another refuge for local practitioners until Specsavers and Vision Express came along in the 1990s. Now these big brands take 80% of all billings. Holt believes that by offering the full range of legal services through ambitious firms with an average starting turnover of £2m, QS can capture 30% to 40% of a market that across the UK is worth £15 billion.

“Even the word ‘customer’ is anathema to many law firms,” he says. “They blush and want to revert to the word ‘client’. Professionalism is used as an excuse for not delivering the best possible customer-focused service.”

The reason that QS is coming ahead of the changes to the law is because it is a cute way around the existing rules that could have launched at any time in the past, albeit that Holt admits that it was the mood towards liberalisation that inspired him to launch the business. When the market is opened to other players next year, though, he believes it will profoundly change the sector. He is pitching QS as a halfway house between what he claims is the poor service of existing players and the impersonal service that will come from the big corporates. It is hoping to attract a decent slice of the business by getting clerical workers to do many of the jobs connected with selling houses or setting up wills that don’t require much knowledge of the law – a kind of extended version of the work that some firms have been delegating to paralegals for some years already.

Meanwhile, other innovators are mobilising too. England has in recent weeks seen the launch of In-Deed, a site that provides legal services to people such as will writing and conveyancing online. In-Deed told the Sunday Herald there are no plans to launch in Scotland at present, but this might change in the future. It has been set up by one of the former senior players at Rightmove.co.uk, the estate agency site that dominates Scotland at least as much as it dominates the rest of the UK.

Holt concludes: “Over time we will see a shift towards brands being the dominant providers. People will choose from three or four brands that they are familiar with. These changes are going to transform the market.”

Regardless of how QS and In-Deed fare, there is some debate about to what extent other players will enter the market in Scotland. Unlike England, the Scottish Government has tried to protect the industry by having a rule that any provider of legal services must still be 51%-owned by a law firm. In theory that will mean that a Tesco or Co-op will have to set up a law firm or take on the market through an entity that it doesn’t fully control. In practice, though, this rule might be irrelevant. Some lawyers believe the new English rules will mean that a Scottish firm with a presence south of the Border could affiliate to one of the English legal regulators and then be subject to the English system – in other words, a supermarket could buy them outright. And given that the English rules have just changed, some believe that this could see incursions into Scotland sooner than expected.

Douglas Connell, joint senior partner of Edinburgh-based Turcan Connell, is one who believes this could well happen. He says: “It would be a pity if this meant that Scottish business ended up choosing to be regulated by an English regulator. It’s only for reserved areas you need to have Scottish solicitors, such as serving a writ or providing confirmation.”

Connell is nevertheless convinced that the changes will be good for the industry, since it will bring economies of scale and efficiencies that will make the law more customer-friendly.

“If I worked for a small firm of solicitors in Dumfries or Stonehaven and along the road was a good pensions adviser who we used for our own purposes, and further along was an accountant who we also used, why wouldn’t we want the opportunity to come together as a united business offering the combination of all those different services, instead of having three separate offices, three IT systems, three receptionists and so on?” he says.

“We are seeing growth of commoditisation in every area of life. You can’t stand against that. We have to offer something distinctive.”

Steven Raeburn, editor of Scottish legal magazine The Firm, is not quite so sanguine. “Law is an art, not a science. It’s not like making widgets. But parts of it can be like making widgets and that’s where people are going to try to compete. But the solicitors who do that work are also the guys you go to when you get divorced or you get unfairly dismissed. The local guy is not going to be there for these things if they are driven out of business,” he says.

Yet the consensus is that the profession is scarcely ready for what is coming. The solicitors’ property centres – the SPCs – are about to launch a national website which should improve everyone’s quality of service somewhat, but that will equally benefit the Quality Solicitors firms as the traditional ones. The prevailing view until recently was that the changes to the law would be a damp squib – the sector’s demise has been predicted several times before, after all, not least when Tesco tried to push into estate agency three years ago. Despite much doomsaying, it failed to make much impression on the market.

Michael Sheridan, secretary of the Scottish Law Agents Society, which represents small solicitors, is among those who does not detect much sign of a fight back, even though he has been trying to rally firms for some time. While he accepts there is scope for some firms to look at how they present themselves, he believes they have several strong arguments to levy against the corporates. As well as the benefits of long-standing relationships, he points out that corporates have potential conflicts of shareholder interest. They might be under pressure to choose between cutting corners and providing the best possible service. Also, their files are not subject to legal privilege. Unlike a traditional law firm, a court could possibly compel them to hand over confidential client documents.

Time will tell whether these arguments will hold sway with customers. In the meantime, expect much soul-searching as solicitors consider whether they can improve their offering. If the cobwebs aren’t cleared away by the firms in question, it might not be too long before much worse is done by the rivals over the road.

Buy a divorce … at a supermarket near you

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