'Upsurge' in Scottish firms interested in ABS status
The Law Society of Scotland has reported an upsurge in law firms north of the border expressing interest in becoming alternative business structures, though it says new regulations enabling them to convert remain ‘some way off’.
Today the Society has submitted a proposed regulatory framework for ABSs to the Scottish government, confirming its intention to apply for ‘approved regulator’ status.
Under the Legal Services (Scotland) Act 2010, solicitors will be able to set up in partnership with other professionals to provide legal services in Scotland. Unlike in England and Wales, ABSs north of the border must have majority ownership by solicitors and/or other regulated professionals, such as accountants or surveyors. In Scotland, ABSs will be known as ‘licensed legal services providers’.
The Scottish government needs to bring forward additional regulations before the Society, or any other interested party, can apply to become an approved regulator of new legal services businesses. A recent spate of cross-border mergers has increased pressure on both the society and Holyrood to bring in the necessary reforms.
Phillip Yelland, director of regulation at the Law Society of Scotland, said: ‘We are hopeful that the Scottish government will confirm it is content with the direction of travel we’re going in with our draft regulatory scheme so far. However we are limited in what we can do until the government introduces regulations on some key issues such as spent convictions, similar to those promulgated in England and Wales, and regulations relating to investors, to allow us to flesh out our draft regime for limited partnerships in Scotland.’
Yelland said there had been growing interest from firms, with increasing numbers contacting the Society to ask about becoming a licensed provider.
He said: ‘There has been an upsurge of inquiries from solicitors’ firms, both large and small, who are considering how they might develop their existing business model under the legislation.
‘You only have to look at what’s happening in the marketplace with the number of recent cross-border mergers to realise that solicitors are considering what the best model is for their business moving forwards and ABSs are part of those discussions.
‘As a regulator, we want to see consistency of regulation and standards. All individual solicitors will continue to be regulated by the Society and I think it’s important that we can also regulate new types of legal services businesses to ensure that there is consistency right across the legal services sector. This will be beneficial both to the profession itself and to members of the public looking for legal advice and services.
He added: 'While we don’t have control of the timetable as to when ABSs will come into being, we are making progress and it may be that by the end of the year we start to see the first ABS applications. We would encourage any interested parties to get in touch with us to have a confidential discussion about their potential plans for the future. This will help our development of a regulatory regime and also mean that if we think that what they want wouldn’t be permitted we can have discussions about that at an early stage.’
The Society declined to speculate on when ABSs will actually become a reality in Scotland. A spokeswoman said: 'Unfortunately there is no date identified because until all the necessary government regulations are in place we cannot submit a final model and it will only be at that point that any actual date might be capable of being suggested.'