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Government consultation on alternative business structures - Law Society response

3 August 2016

The consultation focuses on the benefits of Alternative Business Structures (ABS) and considers removal of additional barriers to external providers' entry into the legal services market.

The Law Society is supportive of ABS as they provide choice for solicitors as well as their clients. However, it is critical that the regulatory framework, including client protection, is equal for ABS and solicitor firms which will enable fair competition and benefits clients.

ABS are new entrants to the legal services sector and the Law Society's 2016 Future of Legal Services Report envisages that by 2020 ABS will be a fully integrated part of the profession, competing with smaller and medium-sized firms.

This kind of change in the market would significantly alter the risk profile for ABS in ways that may not be foreseen. The Ministry of Justice has consulted on making relatively minor changes to regulation processes for ABS. To ensure equivalency and fairness between ABS and solicitor firms the Law Society is supportive of the proposals. However, we recommend a period of regulatory stability while the market adjusts.

Initial take-up of ABS has been reasonably slow and has mostly been by established solicitors’ firms taking advantage of the opportunity for non-lawyers to become owners or investors. However, the Society believes that significant change in the market is likely in the next few years as ABS leverage additional capital to invest in technology or processes to make their business more profitable.

The Law Society strongly recommends that the ABS sector is reviewed three years from the implementation of these proposals and that this includes an equality impact assessment to gauge whether changes have adversely affected diversity in the legal services market.


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