ABSs won’t launch in October as parliament not ready
The implementation of the Legal Services Act will be delayed because the primary legislation needed to enact it has not been debated in parliament.
The act was due to come into force on 6 October, but the Solicitors Regulation Authority (SRA), which is due to become the regulator of alternative business structures (ABSs), now says it is more likely to be at the end of the year.
In a statement the regulator said: “We’ve received a letter from the Ministry of Justice [MoJ] advising us that the parliamentary process will not be complete to enable the SRA to regulate ABS by 6 October.
“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.”
Irwin Mitchell, which has openly declared its intention to be the first to implement changes allowed by the LSA, has criticised the delay.
Managing partner John Pickering said the firm had long anticipated that the changes would come into force on 6 October. “We’ve been working to that date, its very disappointing that it’s not going to happen,” Pickering said.
In April Irwin Mitchell appointed Espirito Santo Investment Bank to advise it on opportunities for outside investment (20 April 2011).
The firm is widely expected to go public with an IPO. In April, Pickering told The Lawyer that the firm aimed to raise £50m to enable it to go head-to-head with mid-tier firms (25 April 2011).
Pickering said the uncertainty created by the latest announcement on ABSs was “frustrating”.
“When you’re dealing with an exercise like this you want to have certainty of the date,” he said.
The SRA added: “We’ll continue to work with the MoJ to ensure the necessary processes for the SRA to become a designated licensing authority for ABSs are completed as soon as possible.”
Readers' comments (5)
Anonymous | 27-Jul-2011 6:41 am
Perhaps they've realised that this is a nightmare in the making and the whole idea will get shelved? Let's hope so for the sake of the profession. I say "profession" but if ABS's come in there wont be any legal profession left. Discuss.
Unsuitable or offensive? Report this comment
Not Convinced | 27-Jul-2011 12:08 pm
With a bit of luck the long grass beckons for this rotten idea.
"...if ABS's come in there wont be any legal profession left." - True. Only large business clients will pay for a solicitor.
ABSs will usher in awful service behind glossy brands, just like retail banking.
Unsuitable or offensive? Report this comment
Anonymous | 27-Jul-2011 12:16 pm
No, they have not realised that this is a nightmare. The SRA has quite reasonably asked for permission to be able to see the spent convictions of ABS owners and legislation is in train for that.
However, the SRA was also not happy about the fact that they were going to have to take ABSs to the First Tier Tribunal rather that the SDT. The reason for this was that the SRA is determined to hang onto its privileged position whereby, regardless of the outcome, it is normally excused the costs of the SDT. This is a scandalous position in the 21st century and is unlikley to survive the first brush with a politically influential ABS. It is this legislation that is delaying the start of ABSs
Unsuitable or offensive? Report this comment
Anonymous | 27-Jul-2011 2:29 pm
Over 300 of the first ABSs will be law firms that are LDPs, are you suggesting that these will not remain part of the 'profession' after October?
ABS won't be without its problems but to think it will just go away is folly!
By the way, I am not part of a QS firm or the SRA; I just don't want to stick with square wheels when I might be able to have round ones!
Unsuitable or offensive? Report this comment
Anonymous | 29-Jul-2011 2:48 pm
How can Government press for regulation of Will writers on the one hand and deregulation of legal services on the other?
The tide is turning against deregulation.
Poor regulation of the Banks/Press/PI industry etc etc has led to enormous problems.
This is another piece of New Labour nonsense which needs to be kicked into touch to protect consumers.
Unsuitable or offensive? Report this comment