The ‘Big Bang’ of Alternative Business Structures

The ‘Big Bang’ of Alternative Business Structures

Justice Secretary Kenneth Clarke has expressed the hope that the advent of alternative business structures could have as dramatic an impact on legal services as the so-called ‘Big Bang’ of 1986 had on the financial sector.

He was speaking on Wednesday at the CityUK Future Litigation event held at the offices of Clifford Chance. He said: “As for domestic regulation, we are less than a month away from an historic change – the introduction of Alternative Business Structures on October 6 that will allow solicitors, barristers and other professionals to combine together in new ways, should they choose to, for the benefit of the consumer. Time will tell, but I hope that comparisons with the Big Bang in 1986 do not prove entirely fanciful.”

The Big Bang refers to Margaret Thatcher’s deregulation of financial markets in 1986, which involved measures including abolition of fixed commission charges, of the distinction between stockjobbers and stockbrokers, and the move to electronic, screen-based trading. The day the London Stock Exchange’s rules changed, 27 October 1986, was dubbed ‘Big Bang Day’. The effects of Big Bang were dramatic, with London’s place as a financial capital decisively strengthened.

For many lawyers the advent of ABS is nothing less than Armageddon, and the justice secretary conceded he was aware that some voices have expressed a “degree of nervousness about ABSs.” He said that his intention is that the new structures will be of benefit both to the economy and to the profession by improving growth in the legal services market, whilst protecting standards. “Through allowing law firms and Chambers in England and Wales to access capital, ABSs could provide greater flexibility to serve clients, increase competition and afford new opportunities for global expansion into legal services”, he said. He was conscious that this is a time of uncertainty, with particular concerns regarding the pace of change, the fate of smaller firms and the implications for quality. But he affirmed: “My priority is that ABSs help firms to work together in an economically viable set-up and that’s why we’ve taken our time in trying to get the regulatory framework right. It is important that consumers, no matter whether using a traditional law firm or a new ABS firm, are provided with first class service and protection.”

Which is fine, and no-one is arguing the toss on that point anymore. The concern is that lawyers themselves will allow the fear of this change to stop them like rabbits in the headlamps when they should regard themselves as having the upper hand. It is they that have dominated the legal marketplace for centuries and they who have all the experience. Changing the way they sell and operate is what the fight it about, not changing the work they do. Tesco law remains the stalking horse but it is time to make sure that club card points don’t ever become a substitute for great legal services.

Image courtesy of conservativeparty’s photostream on flickr

This post was written by:

- who has written 462 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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