UPDATED: ILEX Professional Standards has received ’several enquiries’ from SRA-regulated law firms interested in changing their regulator since applications opened on 5 January, it disclosed today. Nearly 50 businesses run by legal executives have also expressed interest.
Enabling ILEX Professional Standards to begin regulating law firms offering a full range of reserved legal activities marks a new era of regulatory choice. New and existing law firms can now apply to IPS for authorisation as a legal business. IPS-regulated businesses will not have to be owned and managed by CILEx members.
‘This is the first time law firms across the full range of legal services can choose the regulator that is most appropriate for them, and the first time Chartered Legal Executives can establish their own regulated businesses,’ said the body. Individual solicitors switching will, however, be subject to dual regulation, according to information supplied by IPS this afternoon.
IPS said it will apply to become a licensing authority for Alternative Business Structures (ABSs) ‘in due course’.
Alan Kershaw (pictured), chair of IPS, said: “This presents a great opportunity for many new and existing firms, who have a real choice of regulator for the first time. We are very clear about what that choice means. It does not mean a chance to escape scrutiny, or a decline in regulatory standards – it means a regulatory model that is best for your business, giving consumers the protection they need when seeking legal services.
‘It also means that, if they want it, students starting out on the CILEx route are not limited in their career destinations, and can go on to be authorised to provide reserved legal services in one or more branches of the law either running their own practice, or as an employed lawyer.’
IPS chief executive Ian Watson said: ’We have sought to make the process fair while maintaining rigour. So far as we can we have tailored regulatory cost to the size and type of business that we’re going to regulate to make our regulatory offer attractive. Until now, CILEx members were not able to run their own firms independently delivering reserved legal activities. Before they can be considered for entity authorisation, a member must be approved by IPS to practise the relevant reserved activity independently.
’Practice rights applications for reserved activities take approximately three months to process, and we expect that once those eligible are granted the rights, we will then start to receive entity applications from our own membership. We expect applications numbers to build gradually, but over time this will represent a significant market change.’
Asked to clarify the position for solicitors switching to IPS regulation, IPS issued the following information to the Gazette:
’For solicitors working in IPS regulated firms:
* They will continue to be regulated individually as a solicitor by the SRA whilst the firm can be regulated by IPS. This is in the same way as a Chartered Legal Executive can be individually regulated by IPS whilst working for an SRA regulated firm.
* Solicitors would therefore continue to pay their usual practising certificate fees.
For solicitors and/or solicitor firms transferring to IPS:
*There is no minimum number of IPS authorised individuals (i.e. those granted practice rights by IPS) needed for a firm to be regulated by IPS. Put differently, there is no minimum number of Chartered Legal Executives required for a firm to be regulated by IPS. Practising solicitors gain their practice rights by virtue of their qualification, and so do not need to go through the same practice rights application process as Chartered Legal Executives.
*For existing firms wishing to be regulated by IPS, they fill out an entity authorisation form and go through the same process as a new firm.
* IPS will ask the approved manager of the firm (who can be a solicitor) questions about their area of practice and competence. (This is because IPS authorise by competence)
How much would they pay?
* Fees are set by turnover and approach to holding client money. Year 1 application fees are available here: http://www.cilex.org.uk/ips/ips_home/entity_regulation/entity_authorisation_fees.aspx
* The fees for year two will be set as part of the practising certificate review, and will approved under the s51 fee approval process, and will be subject to LSB approval.’