Deech: new business models will “emerge and flourish”
Barristers are looking at creating a wide range of legal businesses – with solicitors, paralegals and others – once the Bar Standards Board’s (BSB) application to become an entity regulator is approved, it has emerged.
The BSB formally submitted its application last week, which it hopes will be approved by September, four years since first consulting on entity regulation.
As part of the application, the BSB reported on focus groups it had held with interested barristers, in which they indicated at a high level the types of entities they were looking at creating.
A “barrister/solicitor” model would involve the two sides of the profession working together in the same firm, or a purely barrister practice working for solicitors. The focus group believed this was most likely to be used for legal aid work.
An alternative would be a barrister-owned practice employing paralegals to do most of the administrative work to support barristers undertaking public access or litigation work.
Under the “chambers entity model”, barristers would move their chambers to a corporate vehicle, so that there could be collective ownership, formal governance structures and “greater branding and marketability”.
Solely for corporate clients, barristers could also set up a corporate vehicle, which operated under direct access principles.
Barristers may want to retain the flexibility of the self-employed model and choose to work both through an entity and remain as part of chambers, the focus group heard, although this was seen as potentially complicating the relationship between barrister and his or her chambers.
A further option was the “barrister spouse model”, where a limited company is set up where the barrister has a lawyer spouse and both could be owners and managers.
The BSB’s application does not cover ABSs, which will be the subject of a separate application to become a licensing authority if the first application is approved. It emerged last month that the BSB is unlikely to start regulating ABSs before 2015, a year later than planned.
Non-lawyer spouses and non-lawyers practice managers wanting to be managers or owners of the new breed of firms would have to wait for the BSB to become an ABS licensing authority.
In its application, the BSB said there was “little advantage to the public” in the BSB establishing a regulatory regime which “simply replicates” that of the SRA or other legal regulators.
“Certain types of risk which are present in the SRA’s regime (client money, external ownership) are quite deliberately excluded from the BSB’s regime. By adopting a different approach to that of the SRA, the BSB will broaden the range of choice available to the public and to those legal professionals who want to work in entities.”
The recently published Barristers’ working lives survey revealed a strong demand for entity regulation, particularly from criminal and family barristers. Barrister-only practices were preferred to ABSs involving non-lawyers.
The BSB said it would be “agile” in responding to changes in the market and, once “minimum core requirements” set out in the rules were met, would determine, by reference to risk analysis, the regulatory objectives and published policies, whether an entity was appropriate for regulation.
The regulator said it had amended its rules to require “explicit consent” from entities and their managers to be bound by the Handbook and disciplinary arrangements.
The BSB said it would also have “a power of disqualification” over firms’ employees but “would not otherwise seek to exercise direct jurisdiction over them”, relying on their employer to secure their compliance and “directing action at the employer”.
The regulator said it expected to be in a position to receive the first applications for non-ABS entity regulation from 6 October 2014.
Baroness Ruth Deech, chair of the Bar Standards Board, said: “Once our application is approved it will help new advocacy focused business models emerge and flourish, which in turn will increase client choice. Barristers will be better placed to come up with new and innovative ways of providing legal services. This is good news for the public.”
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