A new dawn
Date: 10 November 2011
Authors: Anna Bradley
Issue: Vol 161, Issue 7488
Categories: Opinion, Legal services
Alternative business structures (ABSs) could be the catalyst for dramatic change in the shape and culture of the legal sector. On 6 October providers were given a new opportunity to deliver what their consumers need, in the way they want to access it. This landmark change represents a huge opportunity for forward-thinking legal service providers and that is why the Council for Licensed Conveyancers (CLC) has grasped the chance to be the first to licence ABS.
The CLC record
The CLC is itself a creature of innovation, established in 1985 to open up the conveyancing market to non-solicitors, creating more consumer choice. It now regulates over 200 recognised bodies and over a thousand individuals—some 10%-15% of the conveyancing market by turnover.
The CLC believes in the benefits of opening up the legal services market to make it more competitive and focused on the consumers it should serve. The CLC’s designation as a licensing authority is a symbol of willingness to embrace change and spearhead the new arrangements.
The ABS approach
The ABS regime centres on regulating entities alongside individuals, something the CLC has done from inception. Individual and entity regulation both require compliance with codes of conduct, but regulating entities requires more: checks on financial and operating systems, governance controls and staff training and supervision, for example. Entities regulated by the CLC are also required to demonstrate high standards in any services they provide (such as surveying and valuations), alongside their legal practice.
The ABS regime also allows non-legal owners of legal service providers. This creates the opportunity for entrepreneurs with different business experience to shape the delivery of services. This aspect of ABSs is not so new for the CLC either, it has been regulating a similar regime for more than 10 years—44 of the 215 firms the CLC regulates are either owned or managed by non-lawyers and will need to be licensed as ABSs by next October.
Finally, the advent of ABSs marks the introduction of a principles based, outcomes-focused regulation. Regulation that allows legal service providers to focus on what they want to deliver for consumers, rather than on how they show the regulator they are following the right processes and ticking all the boxes. CLC’s new approach is less prescriptive and allows firms greater freedom in how they fulfil their regulatory requirements.
The move to this “risk based” regulation has been as challenging for the CLC as it will be for the regulated community. It has required dedication and commitment from all staff and a more outward-facing and collaborative approach. The CLC is confident that its new systems and processes will enhance consumer protection and encourage firms to act in accordance with the spirit (not just the letter) of the regulations.
The first of many ABSs
Premier Property Lawyers is the first practice to be licensed as an ABS. There are another 20 applications in the pipeline and over 100 early stage enquiries. But this is only the beginning.
New high street names are entering the legal services market. Some legal service providers are responding by developing their own brands, others will doubtless use the potential to seek external investment to help them build their business. Many will access the skills and experience of non-legal managers to re-position their services. The CLC hopes that all will be focused on delivering service packages that suit the varied needs of consumers.
The shape of the future
The CLC looks forward to its regulated community offering responsive and customer friendly “one stop shops” for everything relating to the buying and selling of homes, with conveyancing offered alongside property sales and valuation. As investors enter the market, CLC-regulated ABSs will wish to increase the range of services they offer to include litigation and advocacy. Probate is already regulated by the CLC, but more will be expected, which is why the CLC has applied for an extension of scope into litigation and advocacy and will be working with the Legal Services Board and the Ministry of Justice to show it has the experience, knowledge, and capability to regulate these activities.
At the heart of the Legal Services Act is an ambition for consumers to have an increased choice of high quality legal services. ABSs are pivotal to delivering this. The annual turnover of the legal services market is valued at over £24bn. It is an important contributor to the national economy which provides space for many types of provider to flourish. Hopefully the sector will seize the opportunities offered by ABSs. The CLC is proud to be leading the charge.
Anna Bradley, chair, Council for Licensed Conveyancers.
Website: www.conveyancer.org.uk
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