Reed Smith has made good on its plans to secure an alternative business structure (ABS) licence from the Solicitors Regulation Authority (SRA), but has ruled out the move will be part of a process to pursue an initial public offering (IPO).
The change in regulatory status also allows the firm to be owned or managed by those without legal qualifications, with Reed Smith eyeing a widened provision of service beyond conventional law. The change in structure will not change the firm’s limited liability partnership status, which includes a single partnership and profit pool in the UK, France, Greece, UAE and China.
‘We’ve been trying to get to this stage for some time,’ Reed Smith European and Middle East managing partner Tamara Box (pictured) told Legal Business. ‘We kept coming across opportunities we liked but they would have required an ABS. Part of that is the talent acquisition.’
Obtaining an ABS licence is often the groundwork before moving to towards alternative ways to raise capital, with Gordon Dadds, Keystone and DWF among those who opted to list on the stock market in recent years. Law firms were first enabled to convert to an ABS after the introduction of the Legal Services Act in 2007. In the US, individuals without legal qualification can only be partners in Washington D.C. while the push to allow for ABS models throughout the wider country continues. Part of the delay in Reed Smith securing an ABS licence was aligning the structure with a potential post-Brexit regulatory landscape, according to Box.
Financially Reed Smith has overseen an indifferent year according the firm’s most recent LLP accounts, with turnover across the majority of its non-US offices crawling forward 1%, while operating profit fell almost 5%.
‘Everyone wants to focus on an IPO, but we’re very much an LLP in mindset, so it’s off the cards, there’s not a chance,’ said Box. ‘Collaborating with a client or specific partner is something I could see happening, but there’s nothing on the table right now.’