The Legal Services Board today stressed its determination to sanction alternative business structures by mid-2011, as it launched a discussion paper on how they will be regulated.

The board said it will directly license ABSs if the approved regulators do not seek to become licensing authorities. The LSB will shortly set up a ‘high-level ABS implementation group’ to inform its thinking.

In the paper, Wider Access, Better Value, Strong Protection, the LSB notes ‘concerns among sole practitioners, self-employed barristers and small solicitor practices that they may struggle to survive in a more competitive environment’. However, it says that ‘it is not clear that new entrants represent a real threat to efficient businesses or to consumers’, adding that ‘it is arguable that the scope to innovate is potentially as great for smaller practices as for larger firms’.

LSB chairman David Edmonds said: ‘The case for ABS has been well made by others over a number of years so I am glad we are now in a position to make it happen. It is a top priority for the LSB and we are driving the agenda forward. We are today making clear our commitment to the first ABS licences being granted in 2011.’

The LSB says that while it would ‘expect and hope that a number of approved regulators will seek to become licensing authorities’, it ‘cannot be certain that will be the case’ and will ‘make preparations to take on the responsibility of directly licensing firms with ABS if it proves necessary’. It will issue its own licensing rules in the first half of 2011 if it decides to license ABSs directly.

SRA chief executive Antony Townsend said: ‘We share the LSB’s vision for the future of legal services, promoting choice, innovation and accessibility for the benefit of consumers. The paper confirms the need for an increasing focus on the regulation of firms providing legal services, rather than relying upon the traditional approach of reacting to concerns about the conduct of individual solicitors. The SRA is already making this change in relation to solicitors firms, and we shall accelerate this work to enable the introduction of ABSs.

‘We are giving this matter high priority and will be publishing a paper very shortly setting out our proposals for regulating ABSs.’

The LSB’s discussion paper is seeking views on the benefits and risks of opening up the legal services market, and the appropriate regulatory framework for ABSs.

The paper will also discuss the future regulation of ‘special bodies’ such as trade unions and not-for-profit organisations. ‘Before including them in the licensing regime, we need to be clear about the nature and intensity of regulation merited by the particular risks associated with these bodies,’ the LSB says.

‘We want to see the removal of regulations that act as unnecessary burdens on legal practices or as anti-competitive barriers to entry,’ Edmonds said. ‘Regulation should instead focus on addressing identified risks to consumers, such as conflicts of interest.’

Consultation on the discussion paper will run until 14 August. The discussion paper can be accessed online at www.legalservicesboard.org.uk.