Councils require ABS status to trade reserved services beyond their local area according to the SRA

Local government legal departments that generate extra income by providing ‘reserved legal services’ – including litigation and court advocacy – to other public bodies beyond their local area are only permitted to do so if they use an authorised entity such as an Alternative Business structure, The Solicitors Regulation Authority has suggested.

The regulator’s views emerged at a recent meeting with the Executive Board of Lawyers in Local Government (LLG) and the Law Society, and these have been given further force in a position paper, Looking to the future: Flexibility and public protection – a phased review of our regulatory approach, which the SRA issued on 26 November 2015 regarding a proposed new approach to regulation.

The SRA published its Looking to the future position paper as part of plans to move away from prescriptive rules in favour of protecting the public by setting out the principles solicitors should adhere to. Regulatory measures are to be focused on the areas of greatest risk, while firms are meanwhile to be given greater flexibility to adapt and innovate in order to compete.

The SRA’s comments are likely to cause some disquiet amongst a number of local government legal departments who have either sought to bring in additional revenue through trading as reserved legal services providers or have plans to do so. For now only HB Public Law, Buckinghamshire Law Plus and LGSS Law have ABSs in place, while Essex County Council’s Cabinet recently approved plans for Essex Legal Services to obtain a licence.

The regulator also said it was committed to further simplifying its approach and the 600 plus page Handbook. The latter, the SRA said, was large and complex in its scope and applicability, and needed regular amendment “just to stand still”.

A formal consultation on the proposed changes is due to be launched in Spring 2016.  There will be further consultations as part of a phased review over the next 18 months, the SRA has said, adding that it expected it to be Spring 2017, at the earlier, before any changes were likely to come into force.