Law firms forced to wait for ABS approval as LSA comes into force
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The Legal Services Act (LSA) comes into force today (6 October) but law firms will not be able to become multi-disciplinary partnerships because the Solicitors Regulation Authority (SRA) is not authorised to regulate them.
Justice Minister Jonathan Djanogly declared it was a “landmark day” for the legal profession, but only firms that fall within the regulatory remit of the Council for Licensed Conveyancers will be able to take advantage of the legislation.
The solicitors’ watchdog is expected to become a licensed regulator by January, although this is not guaranteed. The SRA said in July there would be delays with the implementation of the act because of the parliamentary process.
“This is due to discussions with the MoJ to finalise the regulatory appeal process for ABSs, and provisions to enable the SRA to check spent convictions of potential owners,” it explained (26 July 2011).
Today the MoJ said a decision by the SRA “late” in the parliamentary process opting to use the Solicitors Disciplinary Tribunal (SDT) for ABS-related appeals, rather than the first-tier tribunal as previously agreed, had been the cause of the delay.
In a statement the MoJ said: “Our current estimate is that the appeals order is unlikely to be debated before November. Subject to the approval of that order and the making of a designation order for the SRA, we expect it could become a licensing authority by the new year.”
Oxfordshire headquartered Everyman Legal said it would be first in line to get approval from the SRA to convert to ABS and seek a stock market admission early next year.
The firm, which has a corporate structure, will look to raise £500,000 through admission to Sharemark, a stock market for smaller companies.
“Starting out on a smaller market such as Sharemark is a great way to build profile and get to grips with the practical challenges of being a traded company,” Everyman founder James Hunt said. “It will also enable us to start the process of forming relationships with potential investors and analysts, while the low cost and regulatory burden will not weigh us down. This move is also evidence that smaller law firms can take advantage of the Legal Services Act.”
Everyman Legal is home to self employed lawyers who share 70 per cent of the profits it generates with the remainder going to Everyman.
Self-employed lawyers share the brand and 70 per cent of the profits. Everyman had £1m of annualised turnover and £40,000 pre-tax profit – after the solicitors’ share of earnings – in the year to June.
