Thursday 6 October 2011

The Wind of Change in legal services

Autumn 2011 - Rowan Berries
Just over 51 years ago, Prime Minister Harold Macmillan used the phrase "wind of change" in a speech to the Parliament of South Africa. Today, as autumn sets in, the wind of change is blowing and will alter markedly the ways in which legal services are provided to the public. 

ABS in force:

Alternative Business Structures (ABS) are now in force.  This stems from the Legal Services Act 2007 Part 5.   Interestingly, despite the 4 years this has been coming, the only regulatory body currently entitled to licence new business structures is the Council for Licensed Conveyancers - see Law Society Gazette "Premier Property Lawyers becomes first firm to register as an ABS."  The number of ABS is expected to expand markedly in the future and more regulatory bodies (such as the Solicitors Regulatory Authority) will be permitted to issue licences.  Significantly, non-lawyers will be able to have ownership of (or shares in) businesses providing legal services.

According to the Ministry of Justice Fact Sheet, the main benefits of ABS are:

• increased access to finance: at present, providers can face constraints on the amount of equity, mainly debt equity, they can raise

• increased flexibility: non-legal firms such as insurance companies, banks and estate agents will have the freedom to realise synergies with legal firms by forming ABS firms and offering integrated legal and other professional services

• easier to hire and retain high-quality non-legal staff: ABS firms will be able to reward non-legal staff in the same way as they reward lawyers

• Allowing new providers into the marketplace should lead to innovation and price reductions. This should result in more people being able to access legal services

• The ABS regime is facilitative. There is no obligation on a firm to become an ABS although there may be some pressure from competitors which might influence whether or not a firm decides to become one.

It cannot be truly said that everyone in the legal world has embraced these changes with enthusiasm.  Adoption of ABS is likely to be steady rather than a sudden flood of new service providers.

In May 2011, the Bar Standards Board (created in 2006) said that barristers would be able to play a full part in ABS firms - Solicitor's Journal 3rd May.  

Don't panic:

Meanwhile, solicitors are urged not to panic over "outcome-focused regulation" - see Law Society Gazette 3rd October


Those aspiring to become solicitors would do well to note the Solicitor's Regulation Authority's (SRA) new "vetting procedure" - see Law Society Gazette article - " New vetting procedure unfair."   The new suitability test requires applicants to give details of every legal transgression from their past.

The SRA says it ‘may refuse’ applications from those who have previously received a local warning or caution from the police, or those who have paid a Penalty Notice for Disorder (PND) for offences such as being drunk and disorderly, or cannabis possession.

Advocacy accreditation:

Plans for an "Advocacy Accreditation Scheme" appear now to be back on track after problems were raised concerning fees.  Issues relating to fees will not be linked to the scheme - Law Society Gazette 6th October.

Winds of change indeed ..... !

Addendum 7th October:

Did the Earth move?  View from the Of Interest to Lawyers blog - "So apparently from today Waitrose can invest in my mean lean Barrister legal machine...."

Tesco Law.  View from Defence Brief blog.  "This probably sounds like one of the least exciting topics in history, but it is important to everybody...."

"Once companies like Tesco and the Co-Op own law firms does anybody seriously think that their drive for profit will mean that they put their customers first?"

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