With alternative business structures due in 2011, the Solicitor’s Regulation Authority’s fitness-to-own test is likely to be tested. The attraction of law firms and client account to organised criminals cannot be underestimated.

The starting assumption ought to be that, until the data is there to prove otherwise, ABSs present a greater risk to the compensation fund and the reputation of the profession than traditional high street practice. Were organised criminals from overseas to seek ownership of a law firm, the challenges for the SRA in rigorously undertaking its fitness-to-own test would be considerable and the risk high. High application costs would not in themselves prove a deterrent.

The SRA’s proposals are awaited and it would be reassuring to know that it is seeking advice from the security services, the Serious Organised Crime Agency and Eurojust in stress-testing its plans.

To begin with, why not run two compensation funds – one for ABSs and one for traditional high street practices? Compensation fund payees would sleep easier and, if the SRA itself passes the test, then the funds can be merged once there is sufficient evidence to predict the regulatory risk of ABSs in the light of experience.

Tim O’Sullivan, president, Bournemouth and District Law Society