The Legal Services Act, will open upopportunities for law firms to raise cash in a similar way to the financial services Big Bang of the 1980s. Firms will be able to ditch the stuffy partnership structure for whole range of exciting new business models. City suitmakers are stocking up on red braces as we speak. In addition to taking outside capital, firms will be allowed to go into business with other professionals and to admit non-lawyers as partners. Best of all however, law firms will be able to float on the stock market.

The Times: City law firms are preparing to raise millions of pounds from external investors as the British legal market braces for its own version of Big Bang.

At least 20 firms are planning to raise outside funding under rules that will allow non-lawyers to own a stake in legal practices for the first time, accountants advising the firms told The Times.

Three of these firms are planning to raise a war chest for acquisitions of more than £20 million, either through an initial public offering or from private equity investors.

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Before you go and get all excited about shorting loser firms where there’s a partner exodus in full swing, it is unlikely that most firms will go the whole hog with an IPO. External funding can take on a number of guises and it’s likely that a conservative approach will be adopted by most firms (to begin with at least). Private equity will be the obvious route to raising cash whilst avoiding the full glare of public scrutiny brought on by a market listing. As the Times article points out, “the prospect of flotation is particularly attractive to those that carry out a lot of straightforward work, such as personal injury cases, that can be standardised through investment in technology and processes.” Boring.

Although it adds “some City firms are looking closely at an IPO.” Go on!

Such excitement.