Heslett: nothing to fear from ABSs
Alternative business structures (ABSs) are unlikely to create a “serious adverse impact” on access to justice, research conducted for the Law Society is to conclude.
The society has commissioned Oxera Consulting to investigate the potential impact of ABSs and a paper going to this month’s council meeting says that those solicitors Oxera had interviewed “generally considered that their local reputation was sufficiently strong to withstand competition from ABS firms, if that should arise”.
The paper, from Helen Davies, who chairs the regulatory affairs board, continued: “Furthermore, applying the techniques of economic analysis, the researchers considered it unlikely that there would be a serious adverse impact on access to justice from ABS firms, although they acknowledge there was a greater risk in rural areas where access to justice was already somewhat fragile.”
Ms Davies wrote: “It is fair to say that not all members of the regulatory affairs board were persuaded that this analysis was likely to prove correct. Members doubted whether it was sound to place much weight on the perhaps over-optimistic views of the practitioners Oxera interviewed.”
At the time the paper was written (1 July), the full Oxera report had not yet been received by the Law Society but was due.
The Law Society’s attitude to ABSs has softened of late. In his speech to Said Business School in Oxford in late May, president Robert Heslett calmed fears about their potential impact, drawing on the experience of New South Wales in Australia, where similar liberalisation has not proven to be a problem. “I am convinced that we have nothing to fear from ABSs,” he said.
The society revealed in February that it had commissioned Oxera, which last year did work for the Association of British Insurers as part of the latter’s attack on referral fees. It said the analysis was to involve around 20 telephone interviews with law firms throughout February and March; a small number were to be conducted face-to-face at firms’ premises.
The research aims to identify whether some activities are more sustainable than others when ABS firms enter the market, and which activities could more easily be “commoditised”. Firms’ own views of the advantages and disadvantages of ABS were also to be taken into account.
The society said at the time: “We are mainly interested in the current structure of law firms’ businesses in order to analyse the market impact of ABS reform. This would include the basic cost structure, the mix of services offered and the relative profitability of providing these different services.”
The research has focused on two main types of firm: small high street firms with four or fewer partners that offer a mix of routine and very complex work; and specialist, bulk conveyancing or personal injury firms with high non-solicitor to solicitor staffing ratios.
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