Alternative business structures

Law firms and alternative business structures should not be allowed to dodge regulation by establishing separate businesses to handle unreserved work, the Legal Services Consumer Panel said this week. The panel also appeared to rebuke Co-operative Legal Services – whose stated intention is to be one of the first ABSs – for calling for freedom in how businesses choose to provide unreserved work.

Alternative business structures face a fine up of to £150 million for misconduct or non-compliance, with a figure of £50 million for individuals working within them, under plans released by the Legal Services Board (LSB). The LSB said such large figures “will have strong deterrence in the market and avoid situations where any entity or individual may consider ‘pricing in’ non-compliance”.

The Australian legal business consolidator Integrated Legal Holdings, one of the country’s (and world’s) two stock exchange-listed law firms, has resumed its acquisitions programme almost two years after its last merger.

Details of investors in alternative business structures that will be made public should include the beneficial owner but might exclude the names of people with a “significant influence” over the business, the Legal Services Board has proposed.

The Land Registry is to change land registration legislation to ensure that alternative business structures can compete effectively with traditional law firms. It says the prospect of increased competition is potentially good for consumers.

The Law Society is considering a scheme to shore up the position of compliance officers who could find themselves personally exposed under the Solicitors Regulation Authority’s (SRA) proposed handbook. Chief executive Des Hudson also raised concerns over the SRA’s progress towards outcomes-focused regulation.

The Solicitors Regulation Authority has outlined the steps that law firms are able to take under the current rules in preparing to become an alternative business structure. It has updated its July 2009 guidance that just highlighted what solicitors should not do.

TV property guru Sarah Beeny has welcomed alternative business structures as a “positive step forward” so long as they deliver increased choice, lower prices and better service for consumers – but warned that their regulation must be robust to maintain standards.

The latest in our series of extracts from Climate Change, a report on the impact of the Legal Services Act published by accountants Baker Tilly, considers what kinds of law firms might float and the impact it could have on the practice and staff

The Bar Standards Board (BSB) should be the sole regulator for advocacy, the chairman of the Legal Services Board has said. Speaking at a BSB-organised session at Saturday’s Bar Council annual conference in London, David Edmonds said he agreed with the Master of Rolls, Lord Neuberger, who had earlier told the conference that the number of regulators “all regulating [advocacy] is ridiculous” and that if the 2007 Legal Services Act “does not lead to activity-based regulation, it will have failed”.

Legal services is one of the markets most failing UK consumers, with bankers and insurers among those doing a better job, pioneering European Union research has revealed. Lawyers are just ahead of second-hand car salesmen, however. The Legal Services Consumer Panel has branded the results “embarrassing” and said lawyers will have to up their game significantly if they are to resist competition from alternative business structures.

Is it time for solicitors to panic? The significance of the announcement that the AA and Saga have launched legal services websites is less in what they are offering but in the fact that they are the latest big brands to see potential in the legal market.

The Law Society has begun laying down the red lines beyond which it will not be able to support alternative business structures (ABSs), Legal Futures can reveal. The society’s regulatory affairs board has highlighted a variety of issues that it expects to see addressed if it is to judge the arrangements for ABSs satisfactory, including effective controls on the fitness to own of prospective external owners.

The first of a series of extracts from Climate Change, a report on the impact of the Legal Services Act published by accountants Baker Tilly, considers what kinds of law firms and investors will be interested in taking advantage of alternative business structures. And just what would a big law firm do with a £50m cash injection?

The AA and Saga have today launched legal services websites targeted at Middle England as pressure on high street solicitors cranks up. Both companies – which are owned by the same private equity businesses – have tied up with volume law firm Cogent Law to offer services sitting behind an online document-assembly platform provided by legal IT company Epoq Legal.