In the legal sector, there has not been a great flowering of alternative business structures.
Sector regulators are commonly tasked with promoting competition between their subjects. To achieve this, regulators rely on encouraging innovation, new entrants and clients who shop around. They can, as a result, sound a little irritable when any of the three fail to materialise, despite efforts to create a perfectly conducive regulatory environment.
To date in the legal sector, there has not been a great flowering of groundbreaking alternative business structures, hence the close interest in the few examples available.
Kent County Council’s plans for its ABS might see the in-house team’s turnover rise over 10 years from £10.5m to £29m. A 10-year contract with the council gives it some baseline security, with growth plans centred on winning work from public and private sector clients.
That decade-long core security is important, and will be a relief to the Solicitors Regulation Authority and the Legal Services Board.
But such relief also serves to highlight a tension in the regulatory set-up that is not of the regulators’ own making.
While the success of such a legal venture would prove innovation was possible and that the market was an open one, failure would be a problem. The possibility of commercial failure is a sign that a market is not rigged – but it is a sign the SRA can, nevertheless, ill afford, as the failure of any major new venture would reflect badly on its ability to superintend the market.