Psst …. Want to Buy a Law Firm?

The prospect of Tesco or the Co-op owning a law firm or offering legal services had leader writers in the English legal press in a tizzy, but the Legal Services Board today produced a complex consultation document on Alternative Business Structures which sets out eligibility tests for significant equity investments in firms providing legal services.

The aim is to encourage new entrants into the legal services market to bring new ways of working and new competitive pressures: these will increase choice for consumers, while offering better-tailored and better value packages of professional services.

The Times put its own spin on the proposals: People or companies who buy up law firms under the imminent “Big Bang” of the legal profession will have to pass an a special test to prove their “fitness to own” under plans outlined today. They will have to pass a test of probity and of their financial position including a declaration of any criminal convictions, pending criminal charges and any disciplinary action. They must also declare any insolvency or undischarged bankruptcy.

The new regulatory model offers three levels of protection for the public in licensing new models of service delivery.

• a test to ensure that non-lawyer owners and managers of new forms of legal practice are fit and proper;

• the introduction of two new roles in every new firm: the Head of Legal Practice and Head of Finance and Administration who will ensure compliance with licence requirements;

• a widening of the complaints handling system to deal with complaints about firms that do not deliver legal services in isolation but instead offer these alongside other services.

If you want to see the logical consequences of an opened and deregulated approach to legal services, the discussion paper deserves careful reading – comments must be in by February. The areas of law reserved to traditional lawyers have narrowed markedly to

the right to appear before and address one of the Higher Courts and to call and examine witnesses

the conduct of litigation which means the issuing of court proceedings, the commencement, prosecution and defence of litigation

drafting a limited number of reserved documents which transfer land or otherwise alter the rights attaching to it leases or mortgages).

Probate activities, the administration of oaths and notarial activities

From a North American perspective, it’s notable that the LSB addresses international market issues and wants to remove as many international barriers to competition as possible for the benefit of consumers and the public more generally.

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Comments

  1. “the Head of Legal Practice and Head of Finance and Administration”

    I’ve not seen many bodies that function very well with two heads. Eventually, they’ll disagree, and then the question becomes which head gets the last word, Legal or Administrative. I suspect the answer will depend on which head makes the chief investor happier, and I don’t expect that’ll usually be Legal….