LAW firms are reporting diminishing interest in external investment and alternative business structures according to the Baker Tilly LSA (Legal Services Act) survey.

Only 45% of respondents said they were considering an outside investor, compared to 56% in 2010.

Levels of interest in incorporating to provide a currency for investment have also decreased. Only 24% of respondents are considering this now, compared to 34% last year.

The national survey provides insight into the sentiment of the 185 law firms currently operating throughout the North East.

Whilst it was introduced in 2007, local law firms will be most notably affected by the Legal Services Act in October 2011, when they will have the ability to switch to alternative business structures (ABS), whereby a firm can be owned in part or in total by non-lawyers.

Jim Meakin, office managing partner at Baker Tilly in Newcastle, said: “Previously, law firms were interested in the opportunities provided by external investment from listing or private equity.”

But now, he said, firms are either not willing to let outsiders get involved in management, or have concluded that external investment is not the answer to achieving their strategic aims.