Should America Embrace ‘New Age of Alternative Business Structures’?
Speaking at the New York Bar Association Conference in October last year, I summarised how the reputation and duty of the legal sector can remain intact, if ‘professional standards’ are maintained.
Despite the opportunity for Alternative Business Structures to operate unethically, it is ultimately down to the individuals behind them to uphold professional legal service providing standards.
Here is an excerpt from my speech:
“ABSs allow lawyers and non-lawyers to share the management and control of a law firm, while allowing for external investment and ownership. ABSs, like other legal practises, are licensed and regulated by the Solicitors Regulation Authority (SRA).
“At a practical level, the licence application takes between six to nine months, although it is expected that this duration will diminish as the SRA’s experience increases.
“The duty of the solicitor is not to allow his or her independence to be compromised and to act in the best interests of the client.
“This issue is particularly acute in the personal injury sector – the specialism in which I practise. In June 2012, 230 Stage 1 license applications for an ABS have been received by the SRA. The majority those forwarded and granted are in the personal injury sector.
“My conclusion is that the door has already been opened by Australia and the UK, and the United States and Portugal will be left behind if they do not embrace this new age of alternative business structures.
“That is not to say, however, that I am not acutely concerned about the need for the highest professional standards to be maintained. However, I am far from convinced that ownership lies at the heart of the answers required for maintaining excellent professional practise.
“Sadly, in the UK and I believe elsewhere, there are too many examples of professional bodies falling woefully short of the professional standards, which they ought to uphold and maintain. It is about high integrity individuals whether it is an ABS or non-ABS structure which applies.”
This was part of a much heartier monologue, where I went into detail on the origin of ABSs in the UK, how they were met with criticism from the beginning here and how they were defended by Sir David Clementi last year.
For the public, the benefits were listed by Clementi as follows:
Better access to justice
Improve consumer service
Greater consumer confidence
He also cited the potential benefits for legal service providers as follows:
Access to finance
Spread of risk
Ease of hiring and retaining high quality staff
More choice for new legal professionals
There is no reason why a corporate entity should not be able to offer legal representation to the public and I recognise this; I’m simply raising awareness about how it is up to the individuals behind these companies to provide a service in line with the first set of Clementi’s listed benefits.
I am not actively promoting the idea of ABSs over independent personal injury solicitors but instead acknowledging that they are now an inevitable part of the UK legal sector – they can work to serve the public in the US too…if managed properly.
About the Author