The Solicitors Regulation Authority has made a conscious decision not to place too many conditions on new alternative business structures (ABSs), its leader has revealed.

Chief executive Antony Townsend said the terms of the licence had deliberately been kept simple for the 33 entities that have been granted ABS status by the regulator so far. Speaking today at the Westminster Legal Policy Forum, Townsend said the aim was not to tie the SRA or applicants ‘up in knots’ and instead to monitor their behaviour after they had become an ABS.

‘We’re supervising appropriately and managing risk appropriately rather than trying to put in place elaborate licensing conditions,’ he said.

But Townsend denied that ABS applicants were given an easier ride by regulators than traditional firms.

‘We’ve designed our system so that in practice we apply the same risk analysis and regulation to ABSs and traditional firms. We apply a very vigorous application authorisation process to ABSs which arguably puts them at a disadvantage.’

Of the ABS applicants, 30% had come from new entrants, although there have been none from multi-disciplinary practices. The personal injury market has been most likely to move into ABSs, in part as a response to the Jackson reforms and referral fee ban coming into force next year.

Townsend said the SRA had to strike the right balance between appropriate rigour and not inhibiting the market.

He added: ‘We’re seeing a significant number of applications drop out as they progress through the application stages. This is for a number of reasons – not least because further down the line some realise there are issues they failed to consider fully.’

The chief executive predicted there would be more than 100 authorised ABSs within the next year and that the process for granting licences will speed up.

He also accepted there was the chance that enforcement action could be required against a new entrant that breached regulations.

Later, Ken Fowlie, executive director of Slater & Gordon, which bought personal injury firm Russell Jones & Walker earlier this year, told the conference there was no reason to suggest new entrants would be less ethical than traditional firms.

He said: ‘I don’t know of a single lawyer who doesn’t care about making a dollar.

‘There’s a false dichotomy about professional standards and making a dollar. There doesn’t have to be a choice between them.’