Legislation across Australia to enable legal partnerships to incorporate has been a long time coming but is on the near horizon with NSW and Victoria active for a few years and now Queensland with its state legislation in place from 1 July 2007 under the Legal Profession Act 2007 with other states following.

The implications for the structure of the industry are far and wide.  Much attention has been focussed on the operation of multidisciplinary practices and of late the option for firms to float but the impact is much wider than that.  Incorporation may well change the competitive structure of the industry over the next 5-10 years.

Critical to the whole change is the fundamental difference that legal service providers will have the ability to share profits with others and therefore will have access to capital.  Lawyers will no longer be constrained (or protected) by the partnership model where all funding has to be provided by the partners and all profits have to be distributed fully to them, leaving no retained earnings in the business nor the ability to share profits with other parties.

[The complete six page article can be downloaded by clicking on The Long Term Impact of Incorporation.pdf (68.09 KB).]