ABS: Will it create a law firm SOS?

A current commercial issue that may inevitably confront businesses in our region is the quite recent implementation of newly operating Alternative Business Structures. Alternative Business Structures is an innovative idea whereby under the Legal Services Act 2007 non-legal organisations can give legal advice and share management of law firms by obtaining a licence, resulting in external investment. The main purpose of its introduction is to provide more choice for consumers of legal services. Significantly this will impact upon many law firms and also many companies that may desire to adopt a new and cutting-edge business model. Organisations such as the AA and Co-op have now all become an ABS; expanding the legal sector. This may inflict damage upon smaller law firms who may find that their own existing clients and any potential new clients will choose larger organisations for reasons such as practicality, competitive rates and convenience. Although an advantage to companies, it may prove to become a disadvantage to smaller law firms who may already be struggling under crippling Legal Aid cuts, the pressures of differentiating their brand in an overly crowded legal market, and increasing client demands.

As this commercial issue is current and ongoing it is unclear and to an extent uncertain what impact the ‘ABS’ implementation will have in the future among businesses and law firms alike. But clearly there will be more competiveness and aggressive marketing campaigns in order to attract clients and bolster profits.  Neil Rose of The Guardian stated, ‘It may be a difficult time to be a lawyer, but – at least in theory – it should be a better time to be a client.’

Overall it suggests the party who will be gaining the most is the client from the street than the lawyer in the office. The significance of this current commercial issue cannot be underestimated and it is an issue that will only increase as we start to see the first effects of the change.

For more information, this link may be interesting:

http://l2b.thelawyer.com/home/insight/an-alternative-to-alternative-business-structures/3015083.article

http://www.sra.org.uk/sra/how-we-work/reports/research-abs-executive-report.page

If you are interested in setting up an ABS, the link below may provide some initial guidance:

https://www.lawsociety.org.uk/advice/articles/setting-up-an-abs/

This blog post was written by Connor Cartledge. Connor is a final year M Law student at Northumbria University who is currently working in a business and commercial firm in Northumbria’s Student Law Office as part of his final year studies. After University he hopes to obtain a Training Contract with a law firm. He has had a good range of experience with international, national and regional law firms.

Connor

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