The Chartered Institute of Legal Executives (CILEx) has become the latest legal regulator to apply to license alternative business structures (ABS).
Chartered legal executives have been able to set up their own law firms under the oversight of its regulatory arm, CILEx Regulation, since 2015, but not if they have non-lawyer ownership or investment.
In April, a legal executive launched an ABS regulated by the Solicitors Regulation Authority (SRA), saying that the flexibility offered by the ABS regime was attractive given the “constant change in the legal landscape” and reforms-based volatility in the personal injury sector.
Research among CILEx members carried out in late 2015, as work on the application began, showed that a third were positive about operating independently, rather than being employed by solicitors, and of those, 48% were positive about operating as an ABS.
There was particular interest in bringing non-lawyer specialists – such as a finance or marketing expert – into the ownership of the business, and unregulated businesses doing unreserved work into regulation, so that they could conduct reserved legal work.
In a joint statement, CILEx president Millie Grant and CILEx Regulation chair Sam Younger said: “We see this application as integral to the opportunities developed for CILEx members in recent years.
“We believe that by widening the choice of legal providers for consumers, as well as the choice of regulator for legal professionals seeking to run their own firm, we are helping to encourage competition within the legal services market.
“For over 50 years CILEx has offered a uniquely flexible route into a career in law for school leavers, graduates, legal support staff, mature students and those with family responsibilities.
“With membership drawn from a wider social background than other legal professions, we understand the importance of CILEx members being able to draw on a wide range of support to achieve their individual career ambitions.
“We believe that it is right that we therefore ensure our firms are also able to bring external investment, advice and knowledge into their ownership to enable them to operate as successful businesses.”
The application to the Legal Services Board stresses that the greater diversity of the CILEx membership means that ABSs are more likely to have a diverse composition.
“We believe that greater diversity of opportunity within the legal market can assist in developing consumer choice and finding better ways to deliver better services,” it said.
It added: “CILEx members would also have the benefit of operating within an outcomes focused, risk based, proportionate and flexible regulatory regime. Our conduct rules demand high standards of those we regulate but without being overly prescriptive or disproportionate.
“We believe that investors and lawyers will have significant freedom to structure businesses in a manner which best suits them and their client base without having to work around inflexible limitations.”
In July, the SRA announced that it would change its indemnity insurance rules to make it easier for law firms to switch regulator.
The Legal Services Board has 12 months to decide on whether to grant the application. If it does, it proceeds to the Lord Chancellor for final approval.
The SRA, Bar Standards Board, Council for Licensed Conveyancers, Intellectual Property Regulation Board and Institute of Chartered Accountants in England and Wales all currently regulate ABSs.
Meanwhile, CILEx has responded to the Lammy review on BAME (Black, Asian, and minority ethnic) people in the criminal justice system, by calling for its members to be eligible for senior judicial appointment.
At present, chartered legal executives can apply for a range of court and tribunal posts, but no higher than district judge.
CILEx president Millicent Grant said: “The recommendations to improve the diversity of the judiciary are critically important, and chartered legal executives are an essential part of the solution.
“CILEx members are the most diverse group of lawyers in the UK – three-quarters are women, and one third of students are BAME – yet are the least represented group among the judiciary.
“This is in part because of outdated assumptions about chartered legal executives, but also because there is a glass ceiling that prevents lawyers like me applying for senior judicial roles. The government needs to scrap this unjustified barrier, and take other practical steps, if it is to have any hope of achieving a judiciary that is more reflective of the society it serves.”
CILEx recently launched a judicial development programme, which will provide aspiring legal executives with one-to-one mentoring from judges, and tailored support, to prepare themselves for applying.