Government to reduce barriers for ABSs in legal services

The government has announced plans to make it easier for alternative business structures (ABSs) to offer legal services in England and Wales.

By ensuring greater access to the legal market for new ABSs and increasing competition, consumers will have more choice, says a new report published by the Treasury today.

A recent YouGov survey showed that 62 per cent of adults have used a law firm or solicitor before. It also highlighted that the cost of legal services was seen as the most important factor when searching for a legal representative.

With ABSs 15 per cent more likely to introduce new legal services than other regulated providers, the government wants to help new entrants gain a foothold in the market.

A consultation will be launched by spring 2016 on removing barriers to entry for ABSs in legal services and on making regulators independent from their representative bodies.

This will help businesses such as supermarkets and estate agents to offer legal services like conveyancing, probate, and litigation in England and Wales.

The championing of ABSs by the government comes just a week after one of the first such businesses, the Parabis Group, was broken up as part of a pre-packaged fire sale and as Slater & Gordon and the National Accident Helpline both saw their share prices fall following the Autumn Statement.

The chairman of the Legal Services Board (LSB), Sir Michael Pitt, welcomed the government's statement: 'I am delighted that the proposals submitted to ministers in conjunction with the eight legal services regulators in July have helped inform this important development.'

He continued: 'As our work with the other regulators earlier this year showed, there is a strong case for fundamental reform of the regulatory framework in this sector.

'Lack of independence between regulators and representative bodies is slowing reforms that would otherwise benefit both the profession and consumers,' Pitt added.

Speaking for CILEx Regulation, its chair, Sam Younger, said: 'Our focus first and foremost is on what is best for the public. In all important aspects we operate independently of CILEx although we are open to further thinking about development of the regulatory model and will consider the detail of the consultation and how a revised model could impact positively on the consumer.'

Meanwhile, CILEx CEO Mandie Lavin, commented: 'Enabling an innovative and competitive legal services market is in the best interests of consumers.

'We are pleased that the Government will be considering how to make it easier for new market entrants, such as businesses run by specialist CILEx members, and we look forward to supporting the Government as these plans take shape.'

The Bar Standards Board's director-general, Dr Vanessa Davies, said the regulator looked forward to contributing to the consultation document.

'For some time, the Bar Standards Board has supported, in principle, the complete separation of the regulatory and representative functions,' she added. 'This is because we believe it would be in the public interest and would allow regulatory and representative bodies to be stronger in their respective roles.'

However, Catherine Dixon, chief executive of the Law Society, said that while the solicitors' representative body support the government's aim of ensuring a fair and balanced regulatory regime, public protection demands that the setting of rules for legal services must be independent of government.

'Freedom from government intervention is an essential cornerstone of our justice system and of the rule of law,' said Dixon. 'England and Wales is recognised as the jurisdiction of choice but that standing is threatened by any suggestion that government is able to fetter the independence of the legal profession.

'Any such perception, real or actual, would impact on our standing internationally and threaten the direct economic contribution of £23bn made by solicitors.'

'The legal profession must be free to set the standards and rules under which it operates, and also own legal education and training so that standards are led by the people who practice law,' she continued. 'Enforcement of the rules and standards set by the legal profession, by an independent regulator would also be a further protection of the public and consumer interest.'

Dixon concluded: 'It is fundamental to any change that competition across the provision of all legal services must satisfy the aim to protect the public, enable access to services and maintain market confidence.'

Matthew Rogers is an editorial assistant at Solicitors Journal matthew.rogers@solicitorsjournal.co.uk | @sportslawmatt