SRA reveals plans for ABS
The SRA disclosed its plans for ABSs in a speech delivered by SRA Chair Charles Plant at The Lawyer conference on alternative business structures, on 8 November 2010.
The speech revealed that the SRA see their main challenge as the regulation of those ABSs which “involve combinations of different services within one entity” i.e. a multidisciplinary practice. Mr Plant stated that “it would not be appropriate to apply rules solely relevant to legal work to a completely different service ….. [thus] alongside a legal service, there is the very real potential for overlapping regulation, and more worryingly the risk of regulation falling between the gaps. In turn, this may lead to perceptions of inconsistency in regulatory requirements or, worse, different standards of consumer protection. This may especially be the case where the requirements on the entity are set by one professional regulator but requirements on individual professionals are set by others.”
Charles Plant went on to say that the SRA would be applying to be designated as the first, if not?at least, initially?the only licensing authority for ABS. In doing so, he said, the aim would be:
- to achieve the same degree of consumer protection for clients of traditional law firms and ABSs; and
- to facilitate the movement between two statutory regimes, as we believe that some firms will switch status?and perhaps not infrequently.
Later in the speech he went on to look at how best to achieve fair and consistent levels of consumer protection – whether by the operation of a combined compensation fund to cover both ABSs and traditional law firms or by the establishment of a separate compensation fund for ABSs. The view of the SRA is that this would best be covered by a combined compensation fund since two separate funds would “create confusion, be administratively burdensome and result in avoidable yet complex disputes about which fund pays out what losses and when.”
The speech went on to discuss what Mr Plant described as the “nonsense” of reserved activities and made reference to the fact that in discussions with the Legal Services Board, the SRA had been pressing hard for rationalisation of the system, “to ensure that the clients of legal firms, particularly vulnerable consumers, have the protection they deserve, whether they are obtaining services from a solicitor in the high street or from the new kinds of business structures likely to emerge in the autumn of next year.”
Full details of the speech can be found on the SRA’s web site at www.sra.org.uk/sra/news/plant-abs-proposals-speech.page.