ABS conversion deadline for LDPs under review

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12 November 2012

SRA HQ: aware of the LSB’s change of deadline

The Solicitors Regulation Authority is under pressure to extend its April 2013 deadline for legal disciplinary partnerships (LDPs) with non-lawyer partners to become alternative business structures (ABSs), after the Legal Services Board said it was “unlikely” to insist on it before 2014.

In a separate development, the Council for Licensed Conveyancers (CLC) is to remove key ABS ownership information from its public register.

A spokesman for the SRA said it was considering moving back its deadline for LDPs to obtain ABS licences. With less than five months to go, just eight of the more than 200 affected LDPs have so far converted to ABS or applied to do so.

The so-called ‘transitional arrangements’ were put in place to allow businesses with non-lawyer managers to continue temporarily under the new licensing regime but were originally expected to end after 12 months, on 6 October 2012.

Last month the CLC extended indefinitely the “autumn 2012” deadline for its own ‘recognised bodies’ to passport to ABSs, in light of the LSB’s decision.

Seeking LSB approval for rule changes – granted last month – the CLC said the board had advised it that an order ending the transitional period was “unlikely” in 2013. It would therefore ensure that recognised bodies with non-lawyer owners or managers are licensed “by the date specified by the CLC”.

However, the council was committed to it happening “before the end of 2013”.

The new timetable would “have no detrimental impact upon the affected firms; it seeks only to reflect the change in timings dictated by external influences”, the CLC said.

It would also “allow these firms more time to ensure they have the appropriate arrangements in place and enable CLC resources (in determining the licensing applications) to be applied appropriately over a reasonable timescale”.

An SRA spokesman said: “We are aware of the LSB’s change of deadline and will be discussing the best way forward in due course.”

One LDP that was granted an ABS licence in the summer complained the conversion process was more complicated that it should be. Winckworth Sherwood’s head of finance and administration, Tom Vesey – an accountant and non-lawyer partner – called for the process to be simplified.

Meanwhile, in another rule change the CLC has dropped its practice of identifying an ABS’s beneficial owners and those with a material interest in the online register of CLC-regulated entities – a move that brings it into line with the SRA’s public register of ABSs.

The removal of key ownership data from the public domain is a blow to freedom of information since it obscures from scrutiny those who will ultimately benefit from the operation of the ABS.

Explaining the change, the CLC said maintaining the public register will become “unnecessarily burdensome” as ABSs proliferate. It elaborated: “We do not consider this information to be essential to the public interest [or] the allocation of CLC resources to the upkeep of such details on the register to be proportionate.”

But it acknowledged the CLC will continue to collect the same information for its internal register. “It is only the transference of this data to the online register which we wish to remove,” it said, underlining that “the impact to applicants is negligible”.

The information the CLC will no longer make public is: the ultimate beneficial owner; managers of the licensed body; the names of those with a material interest in the licensed body; and the names of authorised persons who are employees of the licensed body.

However, the CLC pointed out that its code of conduct requires an entity’s business communications and website to name its managers. “Therefore, an element of this information is available through an alternative forum,” it said.

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