SRA prepares for rush of ABS applications from criminal law firms

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11 March 2015

Philip: increasing decision-making capacity

Philip: increasing decision-making capacity

The Solicitors Regulation Authority has put in place plans to fast-track alternative business structure (ABS) and other new entity applications from criminal law firms in the event that the legal action against the government’s plans to reform legal aid fails.

Today is the second and final day of the Court of Appeal’s hearing of the appeal by the Law Society, Criminal Law Solicitors Association and London Solicitors Litigation Association against the High Court’s rejection of their judicial review.

The government’s reforms, if they survive the appeal, will lead to a drastic reduction in the number of duty solicitor contracts from 1,600 to 527, causing major consolidation and firms simply going out of business.

In its original Transforming Legal Aid consultation, the government said for existing providers to adapt to the bigger caseloads on offer, they would “need to consider new forms of business structures, such as forming ABSs or joint ventures with other organisations”.

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In his report to today’s meeting of the SRA board, chief executive Paul Philip said: “We have plans in place to handle the anticipated increase in work if the appeal is lost and the tender exercise reopens.

“Our plans focus on increasing decision-making capacity through overtime and bringing in additional staff from other parts of the business. We will also look to run targeted events, including a webinar and drop-in sessions to provide advice to criminal legal aid firms on the authorisation process.”

The concern has long been whether the SRA could turn around applications quickly enough to meet the bidding timetable.

It has been steadily reducing the time it takes to approve ABS applications. The most recent figures showed that it takes on average just over six months from the submission of an application for a firm to be granted an ABS licence, but of the applications submitted since January 2014 which have been granted a licence, the average time taken is under three and a half months.

The SRA has also suggested in the past that it does not anticipate these applications to have the factors that can draw out the process, such as complex ownership or business structures, foreign ownership, complex financing structures, and financing through private equity vehicles.

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