Alternative business structures

The Solicitors Regulation Authority (SRA) is in “serious discussions” with just 15 potential alternative business structures (ABSs), it has emerged. According to the SRA, six different types of organisation have so far shown official interest in becoming ABSs.

Investors can be good for many businesses but not when that business is a law firm, a leading in-house lawyer has warned, expressing particular concern that clients’ interests “may take a backseat to the lawyers’ search for additional capital”.

Solicitors should not rely on clients who express a desire for local, personal services, Professor Stephen Mayson has warned. He also said the “insulting” distinction in law firms between fee-earners and support staff is holding them back.

Creativity and collaboration should be the priority for law firms looking to fend off the threats from a liberated legal market, with joint ventures, referral networks and share offerings all possible solutions, last week’s Legal Futures conference was told.

The “inexcusable delay” in enabling the Solicitors Regulatory Authority to start licensing alternative business structures could make private investors think twice about entering the legal sector, the Legal Futures conference heard this week.

The government has rejected a call from the legal profession that partners in alternative business structures should have to disclose all convictions and cautions, even if spent. But the SRA is still on track to start licensing ABSs in early 2012.

Big brand entrants to the legal market will have a “huge advantage” because of their vast client databases, the Chief Legal Ombudsman has warned. Adam Sampson said new entrants have an acute awareness how to utilise their existing clientele.

The legal market has “enormous scope for consolidation and this is as opportune a moment as there will be to invest” in it, a new report has claimed. Espirito Santo Investment Bank said 2012 will see the “acceleration” of merger activity.

The ban on referral fees will not be a criminal offence and is to be enforced by the legal profession’s regulators instead, justice minister Jonathan Djanogly announced yesterday. Work is also underway to cut the £1,200 payable to solicitors under the RTA portal.

Non-lawyer investors in alternative business structures will have to disclose any previous convictions, even if spent, to pass the ‘fit and proper owner’ test, Legal Futures can reveal. It was the last major hurdle to the full adoption of ABSs.

Legal Futures can reveal that Premier Property Lawyers – one of the largest conveyancing businesses in the country – has today become the first ever alternative business structure as the new regime finally gets underway.

A ‘virtual’ law firm has today become the first UK solicitors’ practice to announce its intention to seek a stock market admission so as to fund growth and attract more solicitors to the business. Everyman Legal will become an alternative business structure when it can.

The latest instalment of our Legal Pioneers series looks at the Whale Rock Professional Services Group, which has legal, accountancy and company secretarial arms. Clients already enjoy the benefits of the one-stop shop, writes Dan Bindman, but becoming an MDP will help considerably.

A “transfer market” of law firm chief executives should emerge in the post-Legal Services Act world, Professor Stephen Mayson has predicted, especially if lenders and investors insist on appointing their own choice of management team as a condition of their financial support.

A leading law firm and an accident management company have joined forces to offer insurance companies and brokers a ‘white label’ alternative business structure combining legal and non-legal operations to revolutionise motor claims processes.