IPS launches entity regulation
New and existing law firms can now apply to ILEX Professional Standards (IPS) for authorisation as a legal business. This is the first time law firms across the full range of legal services can choose the regulator that is most appropriate for them, and the first time Chartered Legal Executives can establish their own regulated businesses.
The new regulatory model is risk-based and will be attractive to new and existing firms. It is not essential for the business to be owned and managed by CILEx members.
Alan Kershaw, chair of IPS, said:
“This presents a great opportunity for many new and existing firms, who have a real choice of regulator for the first time. We are very clear about what that choice means. It does not mean a chance to escape scrutiny, or a decline in regulatory standards – it means a regulatory model that is best for your business, giving consumers the protection they need when seeking legal services.
“It also means that, if they want it, students starting out on the CILEx route are not limited in their career destinations, and can go on to be authorised to provide reserved legal services in one or more branches of the law either running their own practice, or as an employed lawyer.”
Several insurers, having reviewed the new regulatory model, have already confirmed they will provide indemnity cover for firms approved for practice by IPS. New entities will benefit from IPS’s Qualifying Insurers’ Agreement (QIA), which has developed a single proposal form. This means applicants will not have to complete multiple forms to get a quote from insurers, but that all insurers signed up to the QIA will accept, and quote off, a single form.
IPS chief executive Ian Watson said:
“We have sought to make the process fair whilst maintaining rigour. So far as we can we have tailored regulatory cost to the size and type of business that we’re going to regulate to make our regulatory offer attractive. Until now, CILEx members were not able to run their own firms independently delivering reserved legal activities. Before they can be considered for entity authorisation, a member must be approved by IPS to practise the relevant reserved activity independently.
“Practice rights applications for reserved activities take approximately three months to process, and we expect that once those eligible are granted the rights, we will then start to receive entity applications from our own membership. We expect applications numbers to build gradually, but over time this will represent a significant market change.”
The opening of entity applications is the culmination of a long process starting nearly five years ago. Applications were submitted to the Legal Services Board (LSB) in 2013, and in the past year the LSB, Ministry of Justice and Parliament have all approved the applications to allow IPS to authorise lawyers for independent practise across a full range of reserved legal activities. IPS will, in due course, apply to become a licensing authority for Alternative Business Structures (ABSs).