The Law Society has broadly agreed with proposals for ‘minor’ reform of alternative business structure (ABS) regulation – but sounded a note of caution.
Chancery Lane said it is in the public interest for traditional firms and ABSs to be subject to the same treatment.
The government says ABSs have not proved any more risky than traditional firms, and can prove to be more innovative and cheaper.
Proposals include removing the requirement that an ABS must practise from an address in England and Wales; allowing regulators to make their own rules on ownership of an ABS; changing the rules so compliance officers must report a ‘material’ failure to comply (rather than ‘any’ failure as at present); and repealing the requirement to meet the objective to improve access to justice.
Responding to the consultation, which closes today, Law Society chief executive Catherine Dixon said these are relatively minor changes that should put an end to reform for now.
She continued: ‘To ensure equivalency and fairness between ABS and solicitors’ firms, the Law Society is supportive of the proposals. We recommend a period of regulatory stability while the market adjusts.
‘It is critical that the regulatory framework, including client protection, is equal for ABS and solicitors’ firms as this will enable fair competition, which benefits clients and is in the public interest.’
Chancery Lane has also recommended that the ABS sector is reviewed three years after the proposals are implemented, to gauge whether they have affected diversity in the legal services market.
So far, it notes, ABS takeup has been slow and mainly comprised of solicitors’ firms making non-lawyers owners or investors. And the Society is not aware ’of any robust evidence demonstrating that ABSs are providing cheaper legal services, and thereby increasing access’.
However, it adds that the market is likely to change as new entities leverage extra capital to invest in processes or technology. ‘This could significantly alter the risk profile for ABS and the Society believes that this should be kept under review by the Legal Services Board,’ the response adds.