The draft Legal Services Bill is set to pave the way for law firms to adopt alternative business structures (ABSs) which, for some firms at least, is likely to lead to interest from external stake-holders. Accordingly, while some firms may look to grow their business by seeking an admission to the Alternative Investment Market or even the senior exchange, others may look to raise funds via external investors.
The acceptance of external capital raises a number of important ethical issues. External investors will be seeking to maximise their return and will undoubtedly want some form of input into the management of the business. A licensing authority will need to license ABS firms and part of the application is likely to include an assessment of the influence of an external investor on the ethics of practising lawyers.
