Alternative Business Structures: a new direction for the legal profession

This week the Law Society’s Council voted in favour of applying to the Legal Services Board to be a designated Alternative Business Structure (ABS) licensing authority. The introduction of ABS will change both the way that law firms are allowed to operate and also the markets within which they operate – competing ABS owned entirely by non – lawyers will be able to enter that market. The vote by the Society’s Council to adopt and support the SRA’s application means that we can continue to be certain that the future regulatory framework guarantees the same levels of probity and consumer protection that has characterised the tradition and values of the solicitors profession.

I was there throughout the Council Meeting and I can assure all our members that there was a detailed and considered debate by their representatives. Council’s deliberations followed on from earlier work by Council at our meeting in Febuary and the work of Management Board and the negotiating team set up to work with the SRA. Council members discussed and debated the issues thoroughly before deciding by a vote of 54 for and 16 against to approve the SRA’s application to the Legal Services Board.

The imminent availability of ABSs and the mandatory conversion of most LDPs to ABS status will mean that all law firms will have to consider what the best structure or trading vehicle for their business will be. The changes to the markets in which firms operate may intensify existing challenges but may also open exciting opportunities.

It is vitally important that every practice makes a positive choice either to retain the vehicle of a traditional partnership or LLP status or ABS and settle their business plan for the future. Perhaps the worst possible position is to choose by default the status quo and do nothing else. Survival in tomorrow’s market is not compulsory!

This might be particularly important for those firms operating in areas of practice which is easily commoditisable or systemisable. Consider how the Society’s accreditation schemes or CQS and our planned advertising campaigns in support of the profession and the CQS scheme may help you.

I am confident that our profession is well equipped to face the future and seize the opportunities the future holds and that solicitors will continue to thrive in the new legal services market.

The Law Society will continue to help provide clarity on how solicitors can navigate the new regulatory and legal services market and plan to meet both challenge and new opportunities.

An ABS business model will not suit every firm so over the coming months the Law Society will run a programme of national road shows across England and Wales offering practical advice and support for the profession. We will also be issuing a practice note in May. The Law Society will work with Liverpool Law Society to help promote these roadshows and I hope that as many members as possible from Liverpool and across the North West will be able to make them.

I look forward to meeting you shortly.

Des Hudson