What alternative business structures mean for the legal profession

Article wrote by Robert Heslett, president of the Law Society of England and Wales, published by The Guardian.

Soon, perhaps as early as October next year, provision of legal services in England and Wales is set to change radically with the introduction of alternative business structures (ABS). Ownership of legal services providers – currently restricted to lawyers – will be open to anyone deemed "fit or proper". This could be an insurance company or a supermarket – hence the sobriquet "Tesco law".

What difference will this make? Whether it has the impact expected on the way legal services operate, it provides an opportunity for current providers of such services – especially solicitors.

Even before the concept of ABS appeared on the horizon, alternatives to the current model were being debated. The Law Society has long been in favour of choice, open markets and competition. We consider this to be good for solicitors, for the users of legal services and for UK plc. We are a global leader in selling legal services to the world.

Any alternative would have to be subject to the same requirements to protect consumers and the wider public interest as those that apply to solicitors now. Solicitors are already robustly regulated. Whilst regulation is being modernised to become more effective in a market that is evolving, it must remain responsive to the needs of those who use or need legal services.

When new external owners come in there will be three essential protections, in addition to a requirement to comply with the rules applying to law firms generally. First, there must be strict controls over "fitness to own", so that the disreputable cannot gain control of law firms.

Second, the law firm part of the business must be ring-fenced from the rest, so it is clear what is and what is not covered by legal regulation.

Thirdly, it must be clear – as in Australia – that any duties to shareholders are subordinate to the new firms' duties to comply with their regulatory responsibilities, including to the court and to their client.

It is also important to ensure that restrictions do not become too prohibitive. Restrictions on ABS, as on other law firms, are legitimate only to the extent they are necessary in the public interest.

One matter that must not be overlooked in the licensing of ABS is that of the possible adverse effect upon access to justice. The rule of law counts for little without access to justice.

Access to justice is not the same as access to legal advice and services either through traditional channels or by means such as online advice. Access to justice means ensuring a decent level (not a poor man's law) of legal advice and representation for those who cannot afford it on housing issues, on children and family issues and on issues arising from alleged criminal activity. Access to justice is not capable of a crude market solution.

It is possible that the emergence of ABS will prove challenging for existing firms. There may be more competition for solicitors who are well established in what is an already competitive market place. But providing legal services is not the same as selling baked beans as a previous minister suggested. I believe most consumers will generally prefer solicitors, given their unique selling point of being trusted advisers. There is an opportunity for those providing legal services to develop new businesses, but there will also be a need to improve the way in which existing services are delivered in order to meet public needs.

ABS will create new career opportunities for solicitors. There will be broader options in progressing careers and routes forward will no longer be limited.

The society provides a wealth of support for its members in terms of guidance and skills to make sure that solicitors will be able to take advantage of all these opportunities. We are continuing to develop a range of initiatives aimed at diversifying the profession irrespective of what business structures exist now or in the future.

Many new solicitors will have broader options in progressing their careers and will no longer be limited to seeking partnership in a law firm in order to climb the career ladder. ABS will bring new career structures and perhaps greater opportunity for the top end of the career ladder to look more diverse than it currently is.

A word of caution. A radical move away from the way legal services are provided now will not necessarily mean success. The legal profession in the England and Wales has long been extremely successful and is an integral part of UK plc. There is much to be gained from the way the sector operates.

Last year Lord Hunt was commissioned by the Law Society to carry out an independent review of the way legal services are regulated. In looking at ABS Hunt made a point that we must keep in mind as we look at new opportunities.

He said: "Successful ABS will not be those firms that look and behave least like traditional law firms; they will be those that demonstrate the most admirable qualities of current practices."

The Law Society echoes his view as we look to adapt to and help shape the future of legal services.

(Published by The Guardian – June 9, 2010)

latest top stories

subscribe |  contact us |  sponsors |  migalhas in portuguese |  migalhas latinoamérica