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SPOTLIGHT

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Legal Services Board unveils proposals for regulating alternative business structures

The Legal Services Board (LSB) has published an eagerly anticipated consultation paper that sets out its approach to licensing Alternative Business Structures (ABSs).

Under the proposals, the LSB will scrap restrictions that have previously prevented non-lawyers from owning legal services businesses. The new rules will pave the way to lawyers providing their services alongside non-lawyers and legal practices bringing in external investment.

The board promises “a robust framework of consumer protection, professional competence and commercial integrity”. Any licensing system will be founded on three key protections:

  • A fit and proper test for non-lawyer owners and managers;
  • The introduction of new head of legal practice and head of finance and administration roles to bolster compliance with the regime; and
  • A wider complaints handling system that will permit complaints about firms offering additional services than simply legal advice.

The LSB also plans to deliver a greater regulatory focus on the entity providing legal services, not rather than simply its individual lawyers.

The new licensing authorities will be expected to regulate in accordance with the principles outlined in the consultation paper. The first licences should be issued in mid-2011.

Board chair David Edmonds said: “When in place, the new proposals will enshrine and reinforce the essential protections that consumers – and citizens – require. Access to justice and the protection that society as whole has through the maintenance of the rule of law must not be put at risk.”

He claimed the new proposals would give lawyers and new business partners greater flexibility in how to organise and collaborate with each other and other professionals. “We want to encourage new entrants into the legal services market to bring new ways of working and new competitive pressures,” Edmonds added. “These will increase choice for consumers, while offering better-tailored and better value packages of professional services.”

The consultation ends on Friday 19 February 2010.