By Neil Rose
The Legal Services Bill completed its passage through the House of Lords last week, but not before the opposition inflicted one final defeat on the government over concerns about the impact of alternative business structures (ABSs) on high street law firms.
Peers voted 213-145 in favour of a Conservative amendment that would require licensing authorities to consider the likely impact on access to justice of a proposed application to form an ABS when deciding whether to grant it.
Passed with this amendment was one laid by barrister Lord Neill of Bladen, requiring the Lord Chancellor to commission an independent report on the impact of ABSs before they are allowed. He argued that the government's policy 'is likely to have the consequence of wiping out a lot of local solicitors'.
The report would also analyse threats - 'actual or internationally perceived' - to the independence of lawyers. This reflects concerns that non-lawyer investment in, or ownership of, ABSs could be used by foreign regulators to bar such firms from their jurisdictions.
The government resisted the first amendment on the basis that it sought to give one of the eight overarching regulatory principles of the new system greater priority than the others. However, Shadow Lord Chancellor Lord Kingsland said it just required the licensor to investigate the access to justice implications before going on to consider the eight principles.
For the Liberal Democrats, Lord Thomas of Gresford said he feared ABSs would destroy firms which provide 'a service to the communities from which they spring', and replace them with big businesses for which 'price is the only thing that matters' and where potential conflicts of interests 'can be ignored'.
Law Society President Fiona Woolf said: 'Our support for ABSs has always depended on ensuring that the impact of new providers on access to justice is properly taken into account. We were pleased that the House of Lords has amended the Bill to make it clear that this will be done. We urge the government to respect the decision and not overturn it.'
Ministry of Justice minister Baroness Ashton said Lord Neill's amendment placed the government in a Catch-22 situation because it could not gather information about ABSs without allowing them. She argued that the Bill already provided for measured implementation.
The Bill enters the Commons containing several key opposition amendments. However, speaking at the Institute of Legal Executives' presidential luncheon this week, minister Bridget Prentice MP indicated that she would not brook a delay in introducing ABSs.
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