The Legal Services Board (LSB) is pressing ahead with plans to make the new regulatory chamber of the First-tier Tribunal the sole venue for appeals against decisions made over alternative business structures (ABSs), despite strong objections from solicitors.
It is a move that could damage hopes that the Law Society council will next month approve  the Solicitors Regulation Authority’s application to become an ABS licensing authority.
The LSB’s board has agreed in principle to send the proposal to the Lord Chancellor for approval, subject to the consent of regulators that hope to become licensing authorities: the SRA and the Council for Licensed Conveyancers (CLC).
If the LSB plan is given a green light, the regulatory chamber would become the appellate body in relation to ABSs regulated after 1 October by the SRA and the CLC. The tribunal would also hear appeals against decisions made by LSB itself in its capacity as a licensing authority .
Objections centre on the fact that appeals involving SRA-regulated firms would go to the Solicitors Disciplinary Tribunal if an individual works in an ordinary law firm, but to the regulatory chamber if they work in an ABS.
The LSB decision to forge ahead follows a consultation at the end of last year on moving ABS appeals to a single body. Two of the six bodies that responded – the Law Society and the SDT – objected to the proposal, while the SRA expressed reservations.
In its submission the SRA argued that a single body should hear all legal services appeals. But until that happens, it will not formally object to the LSB scheme, should the SRA’s application to regulate ABSs be given the go-ahead by the Law Society council.
The society said its “fundamental concern is that the LSB’s proposals are inconsistent with the principle of equal treatment between ABS and other law firms.” This principle was critical to the society’s support for ABSs and its willingness to regulate them through the SRA, it added.
At a meeting in December of its ABS implementation group – which no SRA member attended – the LSB said it had considered the arguments but that “on balance” it “still considers that a single appeals mechanism provided by the [regulatory chamber] is the best approach”.
The meeting also heard that the LSB has identified four members of the SDT and the CLC’s discipline and appeals committee who are also members of the First-Tier Tribunal. The suggestion is that these individuals could be invited to hear ABS appeals once the new system is in place.
Russell Wallman, the Law Society’s head of government relations, said the issue of making the regulatory chamber the single ABS appeals mechanism “continues to be the subject of discussion between us and the SRA in the context of whether the council will approve the SRAs application to become a licensing authority”.
He added that the society is working towards resolving the “concerns we have about the SRA’s current proposal” in time for the council to vote on the matter in March.
In their consultation responses, the society and the SDT both condemned the LSB for having summarised a previous consultation on ABS appeals as having shown “broad support from consultees”. The society said: “The LSB’s analytical methodology seems to be flawed as their conclusion ignores the fact that all of the groups who are most affected by this proposal were opposed to it.”
One stumbling block in using the regulatory chamber to hear ABS appeals is the fact the it has no power to award costs against a party to the proceedings. The LSB is in discussions with the Tribunals Service about the possibility of amending the rules to provide this power.