The first Alternative Business Structures (ABSs) will be licensed to provide legal services from 6 October 2011. Enabled under the Legal Services Act 2007, ABSs will increase competition in the legal services market, paving the way for new entrants and for third party investment in law firms.
Alternative Business Structures provides businesses with a clear and comprehensive guide to the regulatory requirements and duties for ABSs. A key obligation is for the ABS to institute two new roles, a:-
- Head of Legal Practice (HoLP) - to be held by a lawyer responsible for ensuring compliance with the terms of the ABS licence
- Head for Finance and Administration (HoFA) - responsible for accounts compliance.
Furthermore, the legislation builds in protection for externally owned businesses to ensure:
- 'fitness to own'
- ring-fencing of the legal part of the business to clarify what is and is not covered by legal regulation
- duties to comply with regulatory responsibilities, including to the court and to the client, are prioritised above duties to shareholders.