Launch of ABSs clears major hurdle

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By Legal Futures

19 August 2011


Rejected application: ABS will be able to appeal to SDT

Would-be alternative business structures (ABSs) unhappy with decisions taken by the Solicitors Regulation Authority (SRA) will be able to appeal to the Solicitors Disciplinary Tribunal, it has been decided, in a significant step towards the introduction of ABSs.

But in recommending that the Lord Chancellor approve the ABS appeal mechanism, the Legal Services Board (LSB) has warned that the arrangements are likely to be temporary as it looks to rationalise all legal services regulatory appeals.

The SRA cannot become an ABS licensing authority without putting in place an independent appeal mechanism against a range of decisions it may make, such as refusing an application for a licence, imposing conditions on a licence, disqualifying a person from working in an ABS, or imposing a financial penalty.

The LSB wanted all ABS appeals to go to the general regulatory chamber of the First-tier Tribunal – as they will for decisions of the Council for Licensed Conveyancers – but the SRA exercised its statutory right to choose the Solicitors Disciplinary Tribunal instead because there is greater scope for it to make costs awards.

Following a consultation earlier in the summer, the LSB this week recommended to Lord Chancellor Ken Clarke that he approve a statutory instrument enabling this. The statutory instrument will need parliamentary approval and the fact that the SRA changed its mind on this only in the spring – having previously supported using the First-tier Tribunal – has been one of the root causes of the delay in the ABS start-date.

In its consultation report, the LSB said that its long-term policy aim is for a “single, consistent route for all legal services regulatory appeals (relating to both ABS and ‘traditional’ law firms, and all legal professionals).

“We are carrying out further work during 2011/12 to explore how this rationalisation could be achieved. It is therefore likely that the arrangements put in place by this order will need to be amended in due course.”

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We all know that nothing in life is certain. As the actor, director and philosopher Clint Eastwood once said: “If you want a guarantee, buy a toaster.” He also said he’d tried being reasonable and didn’t like it. They should teach this kind of philosophy in law school. One thing in life is reasonably certain though. If you’re a law firm worth your salt, at some point you will be approached by another entity (most probably a work introducer) with a whizzy idea to ‘partner’ with you to ‘help you accelerate your growth’. In commercial speak this means, ‘we’d like to keep feeding you work but we’d also like to share in your profits’. The arrangement may be pitched to you as a joint venture – a win-win no less.

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