Gary Slapper - The English Legal System

The Legal Services Board (LSB) permitted ABSs from 6 October 2011. This enabled non-law firms to own legal practices and is commonly called Tesco Law by the media. While Tesco may well offer legal services, other large organisations have already registered an ABS. The Co-operative Society became one of the first to obtain a licence and become an ABS. Direct Line, the insurer, has since acquired a licence to become an ABS. Irwin Mitchell, a large legal practice, and Quindell, an AIM listed company, acquired ABS licences. The Solicitors Regulation Authority (SRA) has issued 340 ABS licences to date (SRA website, www.sra.org.uk, March 2015). Slater and Gordon, the Australian quoted law firm, acquired the legal practice of Russell Jones & Walker in April 2012 following the SRA granting an ABS licence. They have been acquiring more law firms. PricewaterhouseCoopers (PWC), a major international accountancy practice, has acquired an ABS for its legal practice, PwC Legal.

Professor Stephen Mayson of the Legal Services Policy Institute of the University of Law wrote in late 2013:

We are just at the second anniversary of licences being issued for alternative business structures (ABSs). In the first year, about 40 licences were issued, and progress seemed slow. A year later, there are still only two licensing authorities, but there have been roughly another 200 new licences. A year ago, we were told that there were another 200 applications in the pipeline. And we have had another 200 licences issued in the past twelve months. So it appears to have taken a year just to process the pipeline. There are no indications of how many are in the pipeline at the moment (stephenmayson.com, 6 October 2013).

The Law Society has not ignored the ABS threat to its members and, in autumn 2008, it commissioned a report by Lord Hunt, which was published on 5 October 2009 and titled The Hunt Review of the Regulation of Legal Services. This is a lengthy report, which starts by considering the recent background to the legal profession and then considers various matters including professional regulation, education and training and ABS.

In his report (p 102), Lord Hunt, in considering how ABS might work and be regulated, commented: How will the inevitable conflict between economic benefits and ethical concerns be resolved? An example of this conflict might arise where a firm decided to settle a major piece of litigation, believing that it was in the best interest of the client to do so. The practices shareholders might suffer a consequential loss of potential profit. Under company law the shareholder may be able to sue the directors for making such a decision. The Australian firm Slater and Gordon, the first legal practice in the Western world to be listed on a stock market, worked with its regulator to solve this conundrum. Its constitution states that where an inconsistency or conflict arises between the duties of the company, the companys duty to the court will prevail over all duties. This position has yet to be tested. As Stephen Mayson has pointed out in his excellent discussion paper on ABS and related issues: