Law firm found to have broken ABS rules
The Solicitors Regulation Authority has found that a law firm overstepped the rules on alternative business structures in an arrangement with an outsourcer.
Publishing an investigation into the agreement between Bradford, Glasgow and Newcastle firm Optima Legal and outsourcing company Capita, the SRA said that ‘while Optima Legal’s original outsourcing and funding arrangements were put together at a time when the form of ABSs was being widely debated, the [arrangements] went further than was allowed by the rules’.
Optima, previously part of national firm DLA Piper, had entered into a loan agreement with Capita which gave the outsourcer an option to obtain shares in the firm once ABS legislation comes into force in October 2011. The agreement provided for Capita to supply administration, HR and IT services to Optima.
Optima’s outsourcing and funding arrangements were restructured in January. The firm had taken advice from leading counsel before entering into the agreement with Capita, and cooperated fully during the SRA investigation. No clients were adversely affected.
Comments
There is a rat in the kitchen
When will the placed keen idiots behind legal services reform realise that the concept of an ABS is a joke if you seriously want legal services to be professional? It does not take a genius to work out that the street smart people of business will always be able to play the system. We all know how most top business people attain their wealth and position - it is lunacy to allow them to have any say in the control of a professional law practice! There will be no Count of Monte Cristo to show them out.
How would a businessman not only own but also control an ABS? Well he could carefully select a Head of Legal Practice who looks good on paper but is a weak individual or bent. There are all sorts of possibilities. Controlled volume customer service monkies doing the day to day lawyers job (this is an inevitable consquence of ABSs) supervised by an efficient lawyer with no intellect with owner partners ranging from weak low calibre yes men to highly intelligent pragmatists whose game plan is make as much money as possible irrespective of whether the firm is likely to go bust to the detriment of the consumer.
Rats are everywhere
In reply to the previous anon, I would think that this situation is understandable. In the face of a budget deficit of 6bn, and a cut of 2m in the MoJ, there is perhaps no other way to find the money to fund a rickety structure such as that in England. You can cut down your staff, so that your income increases while revenue decreases, but can it really make the system more efficient? I highly doubt it. This is, I think, not an idiocy of the higher-ups, but a battle on every field now, and unless the 'street smart people of business' are allowed to step in, there would be no change, for better or for worse. In which case, the deficiency would only prolong. Then you might wish for the 'monkeys' and the 'low calibre yes men' to do the job.
Rats in the Kitchen
Whilst I agree I also think that the current industry structure ensures that 'yes men' succeed. Two years articles and three years to independence supporting partners' lifestyles? Anyone willing to make a ML report or take a risk on a cause is hardly likely to make it.
The professional bodies need to develop a system that creates and strengthens the individual professional lawyer. That means people committed to the professional role rather than people chasing as much money as possible.