Regulating legal services - how special will you be?
This summer both the Legal Services Board (LSB) and the Solicitors Regulation Authority (SRA) have published consultations about the future regulation of Alternative Business Structures (ABSs) (1) They both say that the first licences will be granted to ABSs in 2011.
The default position is that the rules that apply to ABSs will also apply to Not for Profit (NfP) organisations, which employ solicitors. However, these rules may be modified for special bodies such as trade unions, NfP bodies and community interest bodies (2)
NfP organisations which employ (or are planning to employ) solicitors will need to keep an eye on these developments.
What difference will it make?
The regulatory position for solicitors working in NfP organisations is currently unclear. As individual solicitors they are accountable to the SRA, but the extent of their responsibility for what happens in their organisation is unclear.
The Legal Services Act 2007 introduced the possibility that entities can be licensed to provide legal services. This means that the organisation itself will be accountable to the regulator.
The introduction of entity regulation for NfP organisations raises a number of difficult issues:
Who will be responsible?
In our response, ASA has suggested that responsibility for complying with regulatory rules should be shared by the organisation's Board and a Head of Legal Practice (HoLP) (3).
What services will be regulated?
Only reserved legal activities (4) will be regulated. However, both consultations ask whether the arrangements for licensing ABSs include a requirement that non-reserved legal activities (5) undertaken by the organisation should also be regulated.
This raises difficult issues for some NfP organisations - should employing a solicitor mean that all your services (triage, generalist advice, policy work, money advice) are regulated?
Wider Access, Better Value, Strong Protection - ASA's response to the LSB consultation can be found here
Regulating Alternative Business Structures - ASA response to the SRA consultation can be found here
1 Often referred to as Tesco Law
2 s106 Legal Services Act 2007
3 ABSs will be required to employ a HoLP who will have responsibility for compliance and a duty to disclose non-compliance to the regulator
4 S12 Legal Services Act defines these as including the exercise of a right of audience and the conduct of litigation
5 Including the provision of legal advice or assistance
