MDPs given go ahead in Legal Services Bill

Lawyers will be allowed to practice in partnership with other professionals within firms owned by non-lawyers under new legislation, it was announced today (24 May).

Lord Falconer, the Lord Chancellor, made the announcement as the draft Legal Services Bill was published. The Bill follows the Government’s White Paper on legal services reform seven months ago, and will now be subject to scrutiny by a joint committee of both houses of Parliament.

The Bill broadly follows the proposals outlined in the White Paper. An oversight regulator, the Legal Services Board (LSB) is to be established as well as a single complaints handling body, the Office for Legal Complaints (OLC).

Lawyers will also be permitted to set up alternative business structures (ASBs) to work in collaboration with other professionals such as accountants. ASBs will be regulated by front-line regulators such as the Law Society or the Bar Council, which will be licensed by the LSB.

Non-lawyers will be able to manage law firms. Lord Falconer said he thought this would be particularly attractive to large City firms and international practices.

Lord Falconer said: “We’re very keen to encourage providers of legal services to take advantage of the opportunities the draft Bill offers to them.”

Law Society president Kevin Martin said the proposals were “far too cumbersome”, adding that the legislation needs to allow solicitors to remain independent from government.

Bar Council chair Stephen Hockman QC welcomed the Bill, but said that he would have preferred that front-line regulators should retain control of complaints handling.

Hockman also expressed concern about the potential cost of the new system. Lord Falconer estimated this at £67m, a rise of £3m from the estimated cost of current legal services regulation.