CILEx applies to be ABS licensing authority

11 September 2017

The Chartered Institute of Legal Executives (CILEx) has submitted its application to license alternative business structures (ABS), which would enable members to set up their own businesses with non-lawyer ownership and investment.

The application to the Legal Services Board is made by its independent regulator CILEx Regulation and would allow Chartered Legal Executives to set up ABSs directly with their approved regulator.

Research among members carried out in late 2015, as work on the application began, showed a third were positive about operating independently (rather than being employed by solicitors), and of those, 48% were positive about operating as an ABS.

There was particular interest in bringing non-lawyer specialists – such as a finance or marketing expert – into the ownership of the business, and unregulated businesses doing unreserved work into regulation, so that they could conduct reserved legal work.

The greater diversity of the CILEx membership means that ABSs are more likely to have a diverse composition.

“We believe that greater diversity of opportunity within the legal market can assist in developing consumer choice and finding better ways to deliver better services,” says the regulator in its application. 

It adds: “CILEx members would also have the benefit of operating within an outcomes focused, risk based, proportionate and flexible regulatory regime. Our conduct rules demand high standards of those we regulate but without being overly prescriptive or disproportionate. 

“We believe that investors and lawyers will have significant freedom to structure businesses in a manner which best suits them and their client base without having to work around inflexible limitations.”

In a joint statement, CILEx President Millie Grant and CILEx Regulation Chair Sam Younger said: “We see this application as integral to the opportunities developed for CILEx members in recent years. We believe that by widening the choice of legal providers for consumers, as well as the choice of regulator for legal professionals seeking to run their own firm, we are helping to encourage competition within the legal services market.

“For over 50 years CILEx has offered a uniquely flexible route into a career in law for school leavers, graduates, legal support staff, mature students and those with family responsibilities. With membership drawn from a wider social background than other legal professions, we understand the importance of CILEx members being able to draw on a wide range of support to achieve their individual career ambitions. 

“We believe that it is right that we therefore ensure our firms are also able to bring external investment, advice and knowledge into their ownership to enable them to operate as successful businesses.”

The Legal Services Board has 12 months to decide on whether to grant the application. If it does, it proceeds to the Lord Chancellor for final approval.