Act opens way for accountants to join legal firms

Senior accountants considering a move into the legal sector are set to
benefit from new legislation due to come into effect next year.

Under the legislation ­ which has been described as a ‘big bang’ for the
legal profession ­ 25% of partners in law firms can be non-lawyers.

Four in five (82%) of law firms expect to join forces with other
professionals after the Legal Services Act comes into force, a survey from Smith
& Williamson has found.

In 2007, 77% of law firms anticipated joining forces with other professionals
and in 2006, 78%.

Upon entering a legal partnership arrangement, accountants cannot solely act
as passive investors, but must provide ancillary services ­ such as tax advice
to the firm’s clients.

The reform highlights the similarities between the two professions, whether
in the nature of their work ­ tax advice, insolvency and consultancy ­ or the
partnership structure of firms.

Chas Roy-Chowdhury, head of taxation at the ACCA, predicted that the Act
would encourage crossover between the professions but said he did not expect an
exodus of senior accountants to law firms.

Previously, accountancy firms have been open to recruit professionals from
outside the profession but law firms have remained closed to accountants, he
said.

‘It’s good news that the ring-fencing of certain types of work has been
opened up for accountants,’ he said. ‘This [legislation] will bring greater
opportunity for accountants,’ he said.

Mark Bishop, president of the Institute of Legal Executives, welcomed the
legislation, which he said would create more career opportunities for people in
the legal profession and other professions, including accountancy.

He predicted the Legal Services Act will lead to alternative business
structures in which legal executives will be able to work in partnership with
accountants, where lawyers may handle the legal aspects of a property transfer
or be involved in actions in the High Court or County Courts
Giles Murphy, a director at Smith & Williamson, said: ‘The introduction of
the Legal Services Act will undoubtedly prove to be a milestone in the evolution
of legal services in the UK.

‘You only have to look at the effect that deregulation has had on other
sectors to see how wide ranging the impact could be.’

Accountants who transfer to a law firm could find themselves working for a
listed company, if law firms decide to raise capital through the stock market by
going public.