02 Feb After all the hype, are ABSs threatening to be a damp squib?
Alternative Business Structures (ABS) have been the talk of the legal town for years now and though there has been plenty of discussion as to exactly how they will impact the legal industry, it has almost been taken as a given that they will lead to dramatic changes. This though may all be a slight red herring.
The Solicitors Regulation Authority (SRA) have said that they are in ‘serious discussions’ with only 15 potential ABSs out of apparently around 500 initial enquiries.
We don’t know what ‘serious discussions’ means and the SRA has suggested that plenty of other organisation may be waiting in the wings to see how things go, but I have my doubts. The SRA is already slightly on the defensive on this matter having failed to meet the 6 October target date for regulating ABSs and the cynic in me feels that the SRA would be mighty keen to advertise as much interest as possible. Given this, I suspect that ‘serious discussions’ may not even be that serious after all.
So, if despite all the talk leading up to ABSs, not many people are willing to take the leap of faith, it leaves the question, will ABSs actually make that much of a difference?
Before now, we’ve had lots of stories about Tesco law and city firms looking to float on the stock exchange or take private equity investment which has lead everyone to think this kind of thing is inevitable. Though it’s clearly too early to tell what the uptake will actually be, the numbers (so far) do not look encouraging. This is not to try and say that ABSs are dead on arrival and I’m sure as time passes, there will be a significant rise in ABSs but it could be significantly less than everyone was expecting.
However, in many ways the effect of the ABS legislation is already being felt.
The threat of new entrants, that the legal industry has been under for the last few years has undoubtedly accelerated its progression into the modern world. With major law firms looking to reform the way they operate and the creation of legal brands such as Quality Solicitors the legal world has responded well.
Part of the rationale of ABSs was that it would allow the legal industry to utilise new structures to innovate. Perhaps though, it wasn’t a new structure that was needed (law firms seem to be innovating quite happily under the current structures) but merely just the threat of new competition and new structures.