The government is to 'drive down costs' for consumers by encouraging 'supermarkets, motoring organisations, banks and other companies' to own law firms, the Lord Chancellor said at the launch of a White Paper on the future of legal services this week.

The plans will also allow lawyers to enter into partnerships with accountants, chartered surveyors and other non-legal professionals - a step further than the recommendations in the Clementi review.


Under the plans, lawyers and others will be able to work together in 'alternative business structures' (ABS). Non-lawyers will be permitted to own and run ABS firms, which will need to be licensed by an ABS regulator. Existing regulators can apply to become ABS regulators; the Law Society has already indicated its intention to do so.


The White Paper said the new structure would allow 'one-stop shopping for related services, for example, car insurance and legal services for accident claims'.


Lord Falconer added: 'ABS firms will enable different types of lawyers and non-lawyers to work together on an equal footing. External investment will be allowed, allowing firms to expand and take advantage of the latest technology. New business structures will give business professionals greater flexibility. But there will be safeguards.'


On supermarkets and other companies owning '100%' of law firms, he said: 'I believe that if that is done, the consequence will be that certain types of legal services will be provided more competitively. If you look at the conveyancing market, [which has already been opened up], no one believes it has driven down quality - but it has driven down price.'


James Molloy, head of legal services at the AA, said it was now 'actively looking' at its options.


However, the RAC - which has long championed liberalisation - is understood to be reviewing its plans to offer legal services direct to the public following its takeover by Norwich Union. RAC legal services director Eddie Ryan left 'by mutual consent' last month, while head of legal services Jonathan Gulliford also left earlier this year.


A Norwich Union spokesman said: 'We are reviewing our market approach [in relation to the RAC legal services division] to ensure alignment with the parent company.'


Law Society President Kevin Martin said: 'We have long promoted the need for a more flexible, consumer-focused, legal services market and new business structures for delivering legal services.'


The government will publish a draft Bill for scrutiny in the current parliamentary session, with legislation to be introduced 'as soon as parliamentary time allows'.


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