Regulating Alternative Business Structures – Legal Services Act: New Forms of practice and Regulation

Ref:010.09

The Solicitors Regulation Authority (SRA) has set out for consultation proposals to deliver changes in the provision of legal services in the interest of consumers. The Legal Services Act 2007 allows legal services regulators to dismantle the restrictive practices imposed by the regulatory regime under which law firms could only be owned and run by lawyers.

On the 31^st March 2009, the SRA removed the tight restrictions on who can own and manage solicitor firms. Legal Disciplinary Practices (LDPs ) of mixed lawyers and up to 25% non-lawyer involvement are now permitted. The LDPs, however, are an interim measure to a much greater change in legal services provision: the delivery of legal services through alternative business structures (ABSs). It is a change which has the potential to have a major impact upon consumers’ experience of legal services, stimulating competition, encouraging innovation, while safeguarding standards.

The SRA thus invites a wider debate on regulating alternative business structures. The approach of the consultation starts from the following assumptions:

• The prompt liberalisation of the legal services, as set out in the Legal Services Act, is a given, and to be welcomed in the public interest.
• The debate should concentrate upon the desired outcomes for .consumers and how regulation can best assure those outcomes.
• There should be no assumption that traditional business structures are inherently safe and new structures inherently risky.

While ABSs will present some new regulatory complications for approved regulators, the SRA does not anticipated that they will fundamentally alter the rudimentary challenges posed by the regulation of legal services.

The consultation period ends on 31^st August 2009.