SRA Seeks to Ease Regulatory Pressure on Multi-Disciplinary ABSs

Categories ABS, Industry News, Solicitors Regulation Authority

Earlier this month, the Solicitors Regulation Authority (SRA) proposed taking non-reserved legal activities within multi-disciplinary alternative business structures (ABSs) out of duplicate regulation. The move is chiefly aimed at alleviating regulatory pressure on multi-disciplinary practices (MDPs) given their relatively low level of interest in becoming an ABS and encouraging more MDPs to enter the market, the authority said on its website.

More specifically, the SRA wants to waive regulation of non-reserved activities provided by staff that are "professionally regulated other than as lawyers" within a multi-disciplinary ABS. At present all activities carried out by an ABS, including the non-reserved activities, fall under its regulatory scope.

Last month the SRA expressed concerns that the current regime was a huge obstacle to more MDPs taking the ABS path and was also unnecessarily delaying applications.

The authority admitted that, in its current form, the rules had not envisaged that non-reserved legal activities might already be regulated elsewhere. By bringing these activities under the SRA's oversight, certain issues such as duplication, confusion and disputes might arise, it noted.

So far there have been 42 waivers of the separate business rule in relation to ABSs, where multi-disciplinary ABS applicants split their businesses into separate legal entities. This practice, however, has resulted in extra costs and might eventually deprive clients of the advantages that the Legal Services Act sought to achieve, according to the regulator.

The SRA has launched a consultation on the proposals which is scheduled to close on 18 June. The changes could take effect in October 2014 if approved.