Alternative Business Structures – December for applications says SRA

The message from the Solicitors Regulation Authority (SRA) is loud and clear.   Alternative Business Structures (ABS) are coming and despite the delay they will soon be in position to begin accepting applications.

Despite missing the original 6 October date to begin issuing licenses to either new entrants or new-look, entrepreneurial law firms, the SRA is in no mood to accept blame for the situation which has developed.   Reaction has ranged from “a credibility blow for the new regime” to “a shambles” from one leading legal commentator, but Chief Executive Antony Townsend pulled no punches when he blasted the “mischievous reporting” of recent weeks.

Speaking at a Claims Management magazine seminar in Birmingham in mid-October which was sponsored by Eclipse Legal Systems, Townsend was asked to explain the reasons behind the delay when fellow regulator the Council for Licensed Conveyancers did keep its promise and began accepting applications on the 6th.   He revealed that the mechanism for appeals against SRA decisions and the provision to exempt owners and managers from the Rehabilitation of Offenders Act were behind the delay.

“We share the frustration of potential applicants and are working with the Legal Services Board (LSB) and Ministry of Justice (MoJ) to get clarity about the Parliamentary timetable,” he told the audience.

“The framework is we had to get our plans approved first by the Law Society Council and then by the LSB which we did on time. Even as late as August the MoJ might have been persuaded that they could get it through Parliament by October but it was only late in the summer that it became apparent that the small chance had fallen through.   I’m very sorry that has happened but the one thing I’m not going to do is take the blame for it because actually we delivered on our side of the bargain.”

New focus
Townsend used the forum to reveal to representatives from the claimant, defendant, insurance and claims management camps that, despite uncertainty still abounding, the SRA is now planning to open its books to applicants in December.   They would then be in a position to begin issuing licences in late January or February.

“We did our best to be ready for 6 October,” he continued.   “We are now working hard to ensure the new year target will be met.   We will keep up   the political pressure in order to deliver.   I do appreciate it is a very difficult position for those who have carefully drawn up business plans.”

So it seems that Westminster wheels are turning, but they are doing so frustratingly slowly for those firms and individual entrepreneurs out there who had 6 October as central to plans for the future.

Level of interest
When ABS was first mooted following the Clementi report of 2004 and more formerly in the Legal Services Act three years later, the impact on the industry was predicted to be immense.   With major institutions like banks, insurers and supermarkets all said to be jostling for position on the start line ready to take advantage of deregulation in the marketplace, the future could well be bleak for traditional, more high street type of providers.   However, what the SRA did also reveal in Birmingham was the level of interest it has received so far, and that hardly indicates such a scenario.

Around 500 general enquiries have been received over the summer and early autumn, but from that initial figure only 15 “serious discussions” are currently continuing.

The general feedback from the profession has been described as “positive” but the SRA believes many potential ABS are watching and waiting for the initial rush to pass before formerly launching their own plans.   To date just six different types of organisation have shown an official interest in being licensed for this new era by the SRA.   There is little surprise that claims management companies and law firms lead the way, but other interest groups include major retailers, accountancy firms, loss adjusters and private equity houses.

So it seems that if the SRA does deliver on its latest promise to begin the rollout process in late January or early February, the pace of change in the early part of 2012 is likely to be more steady than spectacular.

N.B.   The Council for Licensed Conveyancers (CLC) did begin licensing ABS on 6 October as previously planned.   However, the CLC can only act as a licensing authority for its current existing reserved legal activities which are probate, reserved instrument activities and the administration of oaths.