The number of alternative business structures (ABSs) approved by the Council for Licensed Conveyancers (CLC) has risen to 35 in recent weeks, but several of the new licensees have branded the process as “unnecessary” and delivering “no benefit” to their businesses.
However, there was also bullishness from small firms at the prospect of more big players entering the conveyancing market.
CLC-regulated firms have been allowed to accept external investment and have non-conveyancer partners for several years pre-dating ABSs and the more than 40 practices that did so need to become ABSs.
Colin Crowe, head of legal at Chelmsford-based Dyer & Crowe, said: “We converted to an ABS simply because our structure, with non-conveyancers as shareholders, forced us to.
“I’ve been a licensed conveyance since 1985 and suddenly I’m having to pay for all these checks. Nothing has changed at all and the only thing I thought about the process was that it was entirely unnecessary.”
Solicitor and CLC licence holder Kuljit Ghalan, of LDN Conveyancing Limited in London, said the small firm was set up four years ago by two private individuals as non-conveyancer shareholders, along with a qualified lawyer who has since left.
He said: “Converting to an ABS was mandatory because of our existing structure. It hasn’t made too much difference really, although the advantage of having businessmen involved in running the firm is that you get a different viewpoint from that of a solicitor.”
His thoughts were echoed by Ravinder Dhunna, director of Smethwick-based Midland Property Lawyers, who regarded the conversion as having “no advantages or disadvantages” for the firm.
Woking-based Property Law Partners director David Sledge said its ABS licence would “help keep the option of external investment open for the future”, but added that he had not given any thought to going down that route, having only just finished the process of converting his practice.
He added: “It was simply about keeping our doors open to carry on trading.”
Sole practitioner Sarah Wayman, owner of The Legal House Ltd, also criticised the regulations which forced her to convert to an ABS.
She said that because her mother – a non-regulated minority stakeholder – has a 5% share in the business, her practice had to apply for a licence. She said: “I found the whole thing unnecessary and it took nearly a year, just because a family member has a small share.
“I can understand the need if it is a big conveyancing firm with major shareholders who are not legally qualified, but in my circumstances it was not required. I’m the only one doing the legal work and was having to complete admin and projections for the next three years.”
Despite the demands of the process and the potential of ABS to open up the conveyancing market to increased competition, Ms Wayman was bullish about the future of small firms such as The Legal House.
She added: “I’ve not looked at the possibility of external investment through ABS. For the moment, there’s no real benefit for me – it was just procedure I had to go through to comply with the regulations.
“There’s been the ongoing threat of the so-called ‘Tesco law’ situation and, although I do think the new entrants and private equity funded firms will take a portion of the market, generally people look to someone who has been recommended to them, rather than just a big corporate with lots of backing.
“People in the know have a negative opinion of big brands and feel that you don’t generally get the same level of service or personal touch. I don’t really see them as a threat to what I do.”
The Solicitors Regulation Authority has licensed 139 ABSs.