In the future, some in-house lawyers who offer advice to the public, under the exceptions in the current Code of Conduct, may not be able to do so unless the bodies they are employed by become special bodies. Special bodies are a type of ABS. It is currently unclear exactly which bodies will need to apply to become special bodies. Under the current transitional arrangements special bodies will not need to be licensed until March 2013.
The first alternative business structures (ABSs) are likely to be licensed in October 2011. ABSs are regulated organisations which provide legal services and have some form of non-lawyer involvement. This involvement can either be at the management level e.g. as a partner, director or member or as an owner e.g. an investor or shareholder. There has been much speculation about the affects of ABSs, particularly on smaller firms. However, ABSs have the potential to impact the whole legal market and this includes in-house solicitors.
In-house lawyers are major consumers of legal services. While many of those pushing for the changes, brought about by the Legal Services Act 2007, focused on smaller consumers of legal services, less thought was given to in-house lawyers, as consumers.
It is unlikely, at least in the near future, that big international firms will wish become ABSs. Most jurisdictions do not allow non-lawyer involvement in law firms and those that do normally limit the scope. Becoming an ABS is likely to be difficult for those firms who wish to operate in foreign jurisdictions. However, other firms may well see the potential offered by ABS, either to provide greater investment in their business or have a greater level of non-lawyer involvement in the management of the firm. It is likely that this non-lawyer involvement will change the way in which these firms are run and the services they offer. For instance, having partners or directors from different professional backgrounds may enable a firm to offer a wider range of services. These changes may open new opportunities for in-house lawyers to find new ways of purchasing legal and other services.
Currently in-house lawyers are constrained in the advice they can provide to those outside of their employer's business. Becoming an ABS could allow an in-house team to offer their services more widely, to clients outside their employer's business. However, becoming an ABS would mean an extra layer of regulation for the business, as well as an additional cost. The SRA will closely scrutinise any application for authorisation and will consider numerous factors including the systems and process the body has in place to ensure compliance with regulatory requirements, the suitability of managers and owners of the business and the business plan of the applicant business. Many in-house lawyers may decide that the disadvantages of additional regulation and scrutiny outweigh the advantages of being able to offer services more widely.