Barristers appear reluctant to embrace new ways of doing business following the liberalisation of the legal services market.
Some 156 applications have been submitted since the Bar Standards Board began authorising ‘entities’ earlier this year. However, the vast majority have come from ‘one-man bands’ seeking to exploit perceived tax advantages that chancellor George Osborne has recently moved to abolish, the conference heard.
About 20 barristers attended a session on entity regulation and the bar led by Derek Sweeting QC of 7 Bedford Row, who is chair of the Bar Council’s Legal Services Committee. ‘Our bit of the legal services pie is being squeezed relentlessly,’ said Sweeting, urging barristers at least to consider new business models.
The BSB’s application to regulate businesses authorised to carry out and provide reserved legal activities was approved last December. At the time, the board said that by regulating entities that focus on advocacy, litigation and specialist legal advice, it would ‘significantly help broaden the public’s choice as to how they access legal services’.
For example, barristers and solicitor-advocates would be able to pool resources and share the risks of investing in their own business, without having to change regulators.
However, Natalie Darby, policy analyst at the Bar Council, said the ‘vast majority’ of barristers were ‘quite happy’ with the traditional chambers model and had no plans to change.
All but a handful of applications for entity status have come from single-barrister operations seeking to practise through a limited company and take advantage of savings currently available under the existing dividend taxation regime.
However, July’s emergency budget included changes to that regime which from 2016 will greatly reduce the benefit of incorporation. A briefing note from accountants Place Campbell distributed at the session concluded that when the changes take effect it will actually be more tax-efficient for barristers earning over £140,000 to remain self-employed.
The BSB lodged an application to regulate alternative business structures allowing non-lawyer ownership in April this year. Subject to approval, it could begin authorising ABSs in 2016.