Bearing the brunt of reform

Plans to reform both legal services and legal aid could destroy ethnic minority solicitors' entrepreneurial spirit, says Yvonne Brown

The landscape for sole principals and small firms is set to change radically, if two current government proposals are implemented.


The first, the White Paper on the future of legal services, contains proposals for alternative business structures (ABS), and the second is the Legal Services Commission's (LSC) plans for preferred suppliers, together with Lord Carter's proposals for competitive tendering for the delivery of public funded criminal law work by larger firms.



The recent report by research company MDA raises questions as to the legality of the LSC proposals owing to the severe adverse impact the proposals will have on ethnic minority firms (see [2006] Gazette, 21 April, 1). In particular, the report said: 'The decision to introduce a minimum contract value threshold could potentially have a highly detrimental impact both on small firms and in particular black and minority ethnic suppliers.'



Accordingly, the proposals may give rise to a potential legal challenge on the grounds of direct or indirect discrimination and/or a referral to the Office for fair Trading (OFT), particularly when no real evidence has been provided for the minimum contract value threshold criteria. Nevertheless, solicitors cannot assume that the ABS or the LSC proposals will not be implemented as proposed or in a revised form.


The threat to small firms - from large commercial organisations or from powerful, large crime specialist firms - is real. Is it remotely possible that small firms, and ethnic minority firms in particular, will be able to make or afford the structural changes necessary to compete in the new legal landscape?


The OFT's statement of purpose says: 'The OFT's goal is to make markets work well for consumers. Markets work well when there is vigorous competition between fair-dealing businesses.' On enforce-ment 'the OFT will uproot and deter all forms of anti-competitive behaviour, including cartels and the abuse of market power'.


The aim of the government, through the LSC, to streamline the delivery of services, certainly appears laudable.


The question that the LSC and the government need to ask themselves is why fledgling ethnic minority firms alone should have to bear the brunt of the economic and social cost of 'benefits' for consumers.


In June 2005, the House of Commons All-Party Parliamentary Small Shops Group said that if the UK's small corner shops were squeezed out, local communities would suffer social, economic and environmental consequences.


The same sentiments can be applied to this nascent group of law firms. We seem to be set on a path that may destroy the first fruits of the entrepreneurial spirit of ethnic minority firms and solicitors.


Last November, Meg Munn, Deputy Minister for Women and Equality, emphasised the importance of diversity in maintaining Britain's international competitiveness. The European Court of Justice is likely to be interested if it were to be shown that the British government were treating its ethnic minority lawyers differently.


Firms need to develop a strategy on whether to remain a niche practice, merge, enter a partnership or allow themselves to be taken over by larger firms. What are the implications for clients, on overheads and on the potential for growth? Most importantly, firms need to assess whether the new arrangements will bring long-term benefits or cause them to fold.


Yvonne Brown is the chairwoman of the Black Solicitors Network