Posted by Neil Rose, Editor, Legal Futures
There will no doubt be some finger pointing after our revelation today that the Solicitors Regulation Authority will not be in a position to start licensing alternative business structures (ABSs) on 6 October.
Those with business plans worked up on the basis of 6 October will be rightly annoyed, and it hardly sends out an impressive signal.
First of all, expect the Ministry of Justice (MoJ) and Legal Services Board (LSB) to say that 6 October wasn’t their date, but the SRA’s. This may be true, but they both embraced it readily enough. It was only in recent months that the caveat of “if the parliamentary timetable allows” came to the fore.
This small but highly significant issue of where ABS appeals are heard rumbled on for a long time, and the SRA certainly took its time before opting for the Solicitors Disciplinary Tribunal rather than the First-tier Tribunal. It could, perhaps, have been more decisive, and for sure MoJ and LSB fingers will be pointing in its direction over this.
This meant an unexpected trip for the MoJ to parliamentary counsel to draft a separate statutory instrument and so on, which inevitably held things up. But then the SRA made the decision in March, one that the LSB and MoJ could probably have predicted. Was it really beyond the wit of government to get the SI through Parliament by mid-July?
Then we come to the issue of the exception order to the Rehabilitation of Offenders Act. The SRA says it has been clear from early on that this was always going to be part of its ABS regime. The MoJ provided for the order to apply to non-lawyer partners of legal disciplinary practices a couple of years ago, and is adding HoLPs and HoFAs to the list, so it doesn’t require much of an intellectual stretch to say it should apply to non-lawyer investors too.
However, it is worth pointing out that the other prospective ABS regulator, the Council for Licensed Conveyancers, does not have an exception, and indeed has been regulating non-lawyer owners of licensed conveyancer businesses without one for several years now.
Chief executive Victor Olowe tells me: “Of course, having the exception is desirable and helpful. However, we do not consider the absence of such exception to be catastrophic because we believe that the thresholds we have in place combined with our triangulation approach (cross-checking of data) will provide sufficiently robust protection for consumers.
“Furthermore the types of offences we are most concerned about (such as dishonesty related) only become spent some considerable time after the offence, and so are likely to be discloseable in any event. We require a range of data from applicants so that we can form a rounded picture of their suitability either to be licensed as licensed conveyancers or to become owners or managers of entities we regulate.”
Nonetheless, can you imagine the damage that would be done to the fledgling ABS regime if it emerged that one of the first non-lawyer owners had a conviction for money laundering that he didn’t disclose because it was spent?
That thought alone is enough to convince me. How about the MoJ?