Law firms seeking to be licensed as Alternative Business Structures (ABSs) by the Solicitors Regulation Authority (SRA) have found a variety of ways of organising themselves, Chief Executive Antony Townsend has revealed in a speech today.
And the SRA has been developing its approach to authorisation and supervision in the light of its ten months’ experience of licensing ABSs. Mr Townsend said that the flexibility allowed by the introduction of ABSs had seen successful applicants come up with a wide range of different business models.
The SRA would continue to adapt its processes to reflect the changing nature of applications and the wider legal services market.
Mr Townsend said: “ABS applicants have proved to be highly innovative and forward thinking, whether they are existing legal bodies taking external investment to grow successful business models, proposing to grow by acquisition or creating joint ventures, or entirely new entrants to the legal services market wanting to take market share in areas of law traditionally serviced purely by all-lawyer firms. Seventy per cent of applications are from existing regulated entities, but what they?re doing is very different from each other and extremely interesting.”
Mr Townsend explained that the knowledge gained in licensing the first 31 ABSs had enabled the SRA to issue new guidance to applicants. He said: “The authorisation process is now being revised to enable the SRA to concentrate upon the areas of real risk, thus reducing the burdens on applicants, streamlining the process, and improving regulatory effectiveness.”
As a regulator, the SRA had to strike the right balance between appropriate rigour and not inhibiting the market. Mr Townsend said: “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.” Potential ABS applicants are therefore urged to consult the SRA from the outset.
The personal injury market remains a key area of interest for applicants, especially in light of the referral fee ban and wider Jackson reforms. Firms are taking a conservative view of the ban and erring on the side of caution, setting up joint ventures/wholly owned subsidiaries to offer a range of services.
Legal Compliance Services assists organisations with the ABS application process. For further information please click here.
