Monday, 26 September 2011

Alternative business structures — is there no alternative?

The following comment piece by Clive Suttonhonorary secretary of the Solicitor Sole Practitioners Group (SPG)appeared in the Times newspaper on 1st September 2011

Alternative business structures — is there no alternative?

The news that Rocket Lawyer, an American firm, is planning to offer internet-based legal services to rival the high street’s offering may soon develop into a trend.
The impending implementation in November of Part 5 of the Legal Services Act may lead to a revolution in legal service provision, with the prospect of supermarkets providing legal advice along with your bread, milk and car insurance.
If it comes into force, non-lawyers for the first time will be able to fully own and invest in law firms thus creating alternative business structures (ABSs).
Essentially, Part 5 will allow private companies to own and control law firms, making handsome returns on their investment in the process. Initially, it may be only the large corporates that are able to create ABSs, but it is not hard to imagine a moment when others will enter the market place in the same way as claims farmers came in to make profits from the deregulation of legal insurance services.
This will have an impact on the legal landscape. With ABSs, market forces and commercial imperative will have a far greater role in legal service provision than now.
Of course, profit incentives exist under the status quo — there are plenty of rich lawyers — but it is the scale of the threatened change that has concerned many solicitors.
Primarily, many high street and sole practice solicitors are concerned that independence of thought and legal advice will be at risk. Employed solicitors working in an ABS may find themselves under greater pressure to promote their employer, their employer’s products and views (and even if they are not, they may be perceived to be doing so). This could cause a breakdown in trust between the consumer of legal services and the provider.
Trust is crucial whenever legal expertise is given — you need it when you face criminal charges, when your family could be pulled apart or when you are moving house. It is vital, and threatened by this change.
The Trojan horse of market forces is always welcomed into the citadel of service provision on the basis of lowering costs and improving choice — but not by all.
The Solicitor Sole Practitioners Group, representing 4,500 solicitors in England and Wales who practise with no partners, has expressed concerns to the Government about the dangers of this course of action, concerns that go wider than solicitors losing their independence.
There is a real danger that your high street solicitor will go the way of other high street providers when a supermarket comes to town, that is, out of business, perversely reducing consumer choice, and consequently access to justice.
Sole practitioners are not alone in their ABS scepticism: no jurisdiction in the world, bar the states of Victoria and Queensland in Australia, have introduced them.
At a time when legal aid budgets are being slashed, with firm after firm going out of business leaving advice deserts in service provision across large parts of the country, many will believe that opening up the market is an easy fix.
The problem with this easy fix is that it will have profound consequences. There is still time before Parliament votes on implementing Part 5, and it is vital that this period is used to debate whether this really is the change legal service provision needs.
The author is honorary secretary of the Solicitor Sole Practitioners Group

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