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Delay for alternative business structures

Delay for alternative business structures

6 October was the date on which the first alternative business structures (ABS) should have been able to open for business in the legal services market place in England and Wales. But now there has been a delay, and it will probably be at least the end of the year before non-lawyers can fully own and invest in law firms.

An ABS is a firm where a non-lawyer is a manager of the firm, or has an ownership-type interest in the firm. A firm may also be an ABS where another body is a manager of the firm, or has an ownership-type interest in the firm and at least 10 per cent of that body is controlled by non-lawyers. Under the proposed rules, ABS are not limited in the services that they can offer to the public. The Act is designed to liberalise the £23bn UK legal market by allowing companies to provide legal services, and will permit firms to float on the stock market or seek external capital. The expressed belief is that ABS will bring benefits to consumers through increased competition, the development of new services and ways of delivering them and the integration of the delivery of legal services with other related services.

The Ministry of Justice has informed the Solicitors Regulation Authority (SRA) that parliamentary approval processes will not be completed in time for the SRA to be a designated licensing authority for alternative business structures (ABS) on 6 October, as originally planned. According to LegalWeek, parliament needs to approve the appeals process before allowing the SRA to start licensing ABSs. Provisions must also be made to enable the SRA to check spent convictions of potential owners of law firms.

On their website SRA Chief Executive Antony Townsend said: “We were on track to license ABS from 6 October, so it is disappointing to learn that we will not be able to do so. We will work with the Ministry of Justice to do all we can to speed up the process. But we are in the hands of the parliamentary timetable. It seems unlikely that we will be able to license ABS much before the end of the year, and we shall make further announcements as soon as we have more certainty.”

ABS is the tipping point for the commercial future of the legal profession. The difference is, perhaps for the first time, we will see how non-lawyers will seek to change the way law is practiced in England. The battleground will be online and the future belongs to anyone who uses it well.

Editors note: We don’t normally use the blog to sell ourselves but this is an important exception. Anya Designs has huge experience in both law firms and online commerce. We are probably the only legal software firm in the UK that genuinely understands how law and ecommerce work and when you decide to take the next steps in the new commercial landscape, we would really like to talk to you because a standard web agency may not understand the particular requirements of law firms. Call us on 0845 259 1276 and ask us questions!

This post was written by:

- who has written 460 posts on Upper Case – The Anya Legal Journal.

Mike Gribbin is a retired Civil Servant with wide experience, including the drafting and implementation of Parliamentary legislation and regulations. He is the editor of “Criminal Offences Handbook”, a uniquely comprehensive guide to more than one thousand ways to fall foul of UK criminal law. He is Editor of the Upper Case Legal Journal and has been writing blog posts for the past eight years.

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