SRA says ABSs are likely to prove good news for solicitors and consumers alike

Village life: concern over access to legal advice post-ABSs

There is real potential for alternative business structures (ABSs) to have a positive impact on both the profession and consumers, the Solicitors Regulation Authority (SRA) has said.

The provisional conclusions of an equality impact assessment said solicitors would benefit from improved employment opportunities, while ABSs would facilitate improved access to legal services for consumers.

“However, it is important that we continually monitor the impact of ABSs, on both the profession and consumers, as ABSs begin to enter the legal marketplace,” it said. “Particular focus will be given to monitoring the impact on small firms and sole practitioners, and the diversity of those solicitors involved in an ABS compared to those choosing to remain within traditional firms.”

The assessment acknowledged the concerns of small firms and groups representing black and minority ethnic (BME) solicitors that ABSs will have an impact on the diversity of the profession by enticing consumers away from small firms. The concentration of BME solicitors in small firms means there would be a disproportionate impact on them if small firms closed as a result.

The assessment said: “At the same time, however, it has been suggested that ABSs may lead to the introduction of networks of small firms which would have advantages for solicitors working within these firms, as well as for consumers. It is possible that, through these new ways of working, ABSs could offer a way forward for small firms. Opportunities may also be created for small firms to attract external finance to enable their business to expand.

“Furthermore, it is possible that the introduction of ABSs may lead to an increased diversity of the profession. New job opportunities may be created which may encourage those who would not normally consider a career within the legal profession. As ABSs are likely to be more large-scale than traditional firms, they are likely to be able to offer more flexible working and wider career options, which may also attract a more diverse workforce… ABSs may also provide alternative paths into the profession by widening entry to those with vocational training experience alongside those with a degree.”

It has been argued that demise of small firms could harm local communities and reduce the geographical spread of firms, having a negative impact on some rural consumers. Concerns have also been raised about ABSs operating primarily for commercial motives.

The SRA said: “On a positive note, ABSs may be able to provide legal services in the evening or at weekends, which may provide greater flexibility to consumers and therefore enhance access to justice. They may also lead to reduced costs for consumers, particularly for those on low incomes that do not qualify for legal aid.”

The SRA will publish a full equality impact assessment in the new year. It said it may need to give particular support to small firms and sole practitioners “to help them deal with the changes within legal services”.


    Readers Comments

  • Lots of use of the word “may” in this!

    I think the reality is that we can sum up the present state of real knowledge about what is going to happen and who is going to be adversely impacted by use of the words “I dunno”.

    Business cycles are such that once small firms are impacted noticeably, then it is too late to do anything much to save them. But should we bother about that? I dunno.

    I note, though, that it is assumed this will be good for reasons of “new jobs, “flexibility”, “external finance”, “more large scale”, “evenings and weekends” and so on.

    Naively, perhaps, I thought the main concern would be justice and quality of advice.

  • I am afraid I am not very impressed with the SRAs interim impact assessment on ABSs. Essentially it restates two concerns about ABSs (that they may impact on small firms and BME lawyers in particular) and access to justice (if ABSs drive smaller ‘local’ firms out of business), points out that networks may inhibit some of these effects and then says they need to do more work. I confess to being a little puzzled as to why this interim assessment has been released. It states nothing that is not already and offers no real risk assessment beyond identifying the need to do ‘more work’ on the problems.
    In charitable moments, I sympathise with regulators required to do impact assessments on reforms where it is very difficult to predict the outcome of those reforms. I also tend to get rather depressed when I then read the product of such impact assessments. They usually fall into the habit of indicating what that body hopes the impact of reform will be. My concern with the SRA impact assessment is rather different. Modern regulators who want to take a risk- and outcome-based approach to regulation need to develop stronger methods of analysis and evidence for their positions than this document suggests the SRA currently have done. ABSs threaten or promise (depending on your instincts) profound change in the market for legal services and yet so far the SRA appears to have relied on consultation with its members. As a regulator operating in the public interest it needs to do better than this. At the moment this document, in anticipating the impact of ABS reforms seems rather to shrug it’s shoulders and mumble, “I dunno” when asked what the impact of ABSs will be. It is to be hoped they do better with the full assessment.

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