Multi-disciplinary practices: friend or foe?

Hot on the heels of chartered accountants delivering probate services, the SRA Board has approved a raft of measures which make it easier for multi-disciplinary practices (MDPs) to become alternative business structures (ABSs).
The SRA sees this as increasing opportunities for solicitors, while the Law Society has stated that the SRA plans are more helpful to accountants than solicitors. So, who is right?

The SRA has been subject to criticism for the last two years that it had made life too difficult for those wanting to set up MDP-type ABSs. These were assumed to have been one of the key objectives of the Legal Services Act. The reality has been lower than expected numbers of applications and feedback suggests that potential ABSs find the definition of scope of the SRA’s regulation to be the stumbling block. The regulator has found itself having to grant successful MDP ABS applicants complicated waivers, resulting in increased cost and delay.

In what is an extremely complex part of the Legal Services Act, the SRA has until now taken the view that it needs to regulate all reserved and unreserved legal activities in
an ABS. However, in the SRA Board’s September meeting
it decided to accept, in certain circumstances, that it would not need to do so.

Non-solicitor regulation

The way it will work is that the SRA will continue to regulate solicitors as individuals but non-solicitors will be subject
to the provisions of their own professional regulator. The
SRA Board expects to issue a consultation paper at its next meeting in late October and to have the new regime in place by April 2015.

The Legal Ombudsman (LeO) has also become involved in the MDP debate, by introducing a policy for dealing with complaints about organisations which offer non-legal as well as legal services. These include some ABSs, as well as the horde of accountants about to offer probate services. The Legal Services Act gives LeO power to examine any case where a person undertakes any reserved activity, as well as any unreserved activity which they also provide. However, non-legal activities conducted by the same body are the subject of doubt. LeO has now said that it will accept complaints “where we consider that the complaint is about a legal service”. Initially the Ombudsman will run a pilot scheme for twelve months, then review it.

The SRA Board paper on MDPs went on to say: “The next stage of our reforms will aim to assist the recognised bodies [traditional law firms] in providing a wider range of services without the need to become ABSs”. This means that the SRA is looking at changes to its separate business rules. The LSB, with its competition-based agenda, has been putting pressure on the SRA for some time now to change the rules.

The SRA stated: “such changes will assist existing providers that do not wish to become ABSs to provide multi-professional services (for instance by taking on chartered accountants) and thus increase their market share”.

Law Society stance

So the SRA has moved to keep the LSB happy by making life easier for MDP ABSs and to keep traditional law firms content by giving them the means to compete. Right? Well, no actually. The Law Society has a slightly different take on things, saying, “we are disappointed that the SRA plans to make it easier for accountancy firms to enter the legal market”. The Society’s view is that removing legal work from SRA regulation where it is performed by an accountant within an Institute of Chartered Accountants in England and Wales (ICAEW) regulated firm will create confusion for clients and give large accountancy firms a competitive advantage.

The core issue, of course, is
the absence of any definition
of non-reserved legal activities which solicitors, accountants and others are competent to provide, whether in an MDP
or under the aegis of their respective regulators. It is understandable that the
SRA should wish to avoid responsibility for regulating non-solicitors in these grey areas, and one is inclined to wonder whether, in its desire to demonstrate its concern for protecting solicitors’ interests, the Society may be turning into a Canute? The opportunity has become a threat. SJ

Stuart Bushell is managing director of SIFA