Ambitious young lawyers will increasingly seek ‘bespoke incentive plans’ after as little as three years’ service with a firm, rather than wait decades for rewards under the ‘anachronistic’ partnership system, a City bank claimed this week.

In a report on the future of legal services - The Legal Services Market: The Race Is On - 10 firms will emerge from a rush of mergers and acquisitions - rivaling the magic circle in size - along with a host of bespoke specialists.

The full implementation of the Legal Services Act may not yet have caused the ‘big bang’ envisaged when it was passed in 2007, with the Solicitors Regulation Authority still not authorised to license alternative business structures, but experts foresee huge ramifications over the next five years.

John Llewellyn-Lloyd, head of professional services at Espirito Santo, said the sector will feel the full force of what his report describes as a ‘perfect storm’ of ABSs and non-legal practitioners competing for market share.

‘The concept of a partnership as the bedrock of legal services business will be challenged,’ he said.

‘Increasingly, young lawyers have been unimpressed and disincentivised by the anachronistic structure that requires continuous employment for 25 years to monetise their talent.

‘The modern young lawyer will naturally respond to shorter remuneration cycles. ABSs will provide managers with the tools to break the long partnership remuneration cycle and replace it with bespoke incentive plans based on three to five years.’

At the same time, analysts forecast that niche and exclusive firms - many of them sole practitioners - will survive and prosper if they are well managed and their services are targeted at the right audience.

Viv Williams, chief executive of business consultancy 360 Legal Group, said firms that establish a strong management set-up and bring in staff with a financial background will succeed.

‘There will be failures and sad stories along the way, but if people are prepared to grasp this opportunity there are big rewards out there,’ he said.

Professor Stephen Mayson, director of the Legal Services Institute, echoed that opinion when he spoke to a Law Society conference on the future of regulation: ‘The rewards are there not just for non-lawyers and people not currently in the market to the exclusion of those who are.

‘It strikes me from the position of an incumbent law firm that has been around for a long time that this is a golden opportunity.

'People on the outside are saying we’ve not done as well as we should - let’s prove we’re capable. A lot of it is attitudinal and between the ears.’