ABS countdown | Could ABS catch on outside England and Wales?

Nine months after the introduction of alternative business structures (ABS) in England and Wales, there are a mere nine examples in existence. The slow start must be due, at least in part, to the fact that of the ten regulators approved by the Legal Services Board, only the SRA and the CLC can actually license ABS. And questions have been raised about their capacity to handle with the variety of new business propositions being thrown at them.

The conveyancers have managed to authorise only two of their ABS applicants since October 2011 and the SRA, which finally got itself into a position to commence licensing in March of this year, has allowed seven in the following four months. However, according to the SRA, some 30 or so applicants are very close to getting their licence and 200 more are forming an orderly queue behind them. The numbers will be boosted by the need for many of the 500 or so legal disciplinary practices to convert to ABS status or shed their non-lawyer owners or managers, although it is not clear exactly when that will be. In addition, it appears that the Bar Standards Board, CILEX and eventually the ICAEW accountants may join the two Licensing Authorities but this is not likely to be in 2012.

What does the rest of the legal world make of the English experiment? After protracted wrangling, the Legal Services (Scotland) Act became reality earlier this month. Scottish ABS is limited to 49 per cent external ownership, with majority ownership confined to solicitors and other regulated professionals, notably accountants and surveyors. Potential ABS firms cannot yet apply but the Law Society of Scotland has reported some interest, with Edinburgh firm Turcan Connell aiming to be the first successful applicant.

Protecting smaller firms

It remains to be seen whether the decision to protect small Scottish provincial firms by confining ABS to professionals, and thereby preventing the incursion of multiples such as the Co-op, will work to the disadvantage of larger Scottish firms, some of which have responded to the new legislation by cementing cross-border mergers - McGrigors with Pinsent Masons and Biggart Baillie with .