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Companies look at ABS switch to profit from in-house teams


Accounts: companies that want to cross-charge legal services should consider ABS option

A number of companies are looking at registering their legal departments as alternative business structures (ABSs) in a bid to turn their in-house function into profit centres, it has been claimed.

However, according to legal publisher LexisNexis, while some companies are keen on turning their in-house functions into ABSs, issues such as competition, complexity of structure and administration burdens need to be addressed.

Likewise, the standing of legal professional privilege (LPP) is unclear.

LexisNexis has been working on the impact of the new regulatory regime on in-house lawyers with its in-house advisory panel, and recently interviewed Bruce Macmillan, general counsel of the Legal Services Board.

Mr Macmillan said the pros and cons of becoming an ABS were the same: setting up a law firm. It offered opportunities for in-house counsel to expand their range of services and deal with any privilege issues, among other benefits, but there was also “a higher compliance duty”.

An accompanying LexisNexis guide for in-house counsel said there are various circumstances where companies should consider structuring their legal teams as ABSs:

Though in the UK companies can claim legal professional privilege in relation to the work of their in-house legal teams, this is not the case everywhere in the Europe and also does not apply in the face of European Commission competition investigations. Further, as we reported last week [2], the Law Society is concerned that the position in Europe could deteriorate.

“At the moment, the situation regarding legal privilege and ABS structures is unclear,” said Laura Spooner from the practice compliance team at LexisNexis. “Everyone is waiting for the verdict in the Prudential case. While that does not directly touch on an ABS structure, it should clarify the issue to some extent.”