A regulation chief has warned the UK’s biggest commercial firms that they are ‘deluded’ to think alternative business structures will not affect them.
Solicitors Regulation Authority chairman Charles Plant told the Association of Personal Injury Lawyers conference on Friday that no firm could assume they would be immune from the impact of the new ownership model. ‘For those firms and businesses who say they have no interest I say you’re looking through the wrong end of the telescope,’ he said.
‘Your competitors are very interested, as are the young lawyers who represent your future. The tentacles of ABSs spread to many other areas and will impact directly on you.’
Young lawyers entering the profession want to be part of progressive practices, Plant said. ‘The new generation want to control their destiny and, given the choice between joining a traditional law firm with slow steps up the ladder and joining one with share options, many will take the latter course. City of London firms take note.’
Plant, a former partner at City firm Herbert Smith, said ‘Well-run, ambitious firms who understand what is going on in the market will treat this period as one where the opportunities are great. If these firms take the opportunities I am sure they will succeed, just as those who fail to take the opportunities I fear are doomed to fail.’
He stated that 74 applications for ABS status were now at an advanced stage and denied there had been delays to the process.
The SRA announced its first three successful licences last month but no further applications have been completed since then. Of the next round, Plant said: ‘Many are not straightforward, some of the structures being proposed are complex and need careful scrutiny by us, whilst some are incomplete. There is no backlog - the applications are being properly and efficiently processed.
‘You will have read some applicants have expressed surprise by the rigour but that is what the protection of the public and the profession requires.’
Plant said it was important that personal injury firms prepare themselves for the future, with government reforms of civil litigation set to coincide with new competitors gaining ABS status. He gave his backing to law firms having official links with claims management companies and said it was one option for negating the effects of a ban on referral fees.
Plant also warned that the SRA will be looking closely at firms that continue to offer services on a no win, no fee basis.
‘Some firms will conduct too many cases on contingency fees and will expose themselves to collapse if they don’t win those cases. We will conduct enquiries on such firms.’