The Legal Services Act 2007 (LSA) was
designed to increase competition in the legal market and to put the consumer at
the heart of the regulatory system. Half
way through the first year of Alternative Business Structures (ABS) having been
permitted, The Legal Services Board (LSB) has released an interim report into
what impact the LSA has had on the profession.
The overall conclusion is, rather disappointingly, that it is “too early
to tell’.
This does rather beg the question of
whether there was really any point in releasing a report at a time when only 3
ABS have been approved (2 of which were very small existing law practices, and
all 3 of which were only approved 2 weeks ago).
It would be inconceivable that these 3 firms could have had any material
impact on the legal market as a whole, much less to achieve it within 2 weeks
of approval. Of course, if only 3 legal business
had applied for ABS status, then it might indeed have been a noteworthy
finding that there had been so little interest as it could be seen as an
indicator that the LSA was likely to fail in its main aim of stimulating
competition, but this is not the case. It is known that at least 60 stage two ABS applications have been submitted, after
initial interest from almost 180 organisations. There has been much frustration on
the part of the applicants at how opaque the system for approval is and how
long it is taking. Indeed, when the
first 3 firms were approved by the SRA a couple of weeks ago, there was some
hope that the log jam may start to move but since then, there has been a
resounding silence and no further approvals granted.
Although the report claims to establish
a “baseline” against which the profession will be measured annually in the
future against 17 key indicators, surely it would have been more appropriate to
do this either immediately before the ABS regime came into effect (ie 6 months
ago), or after sufficient time for it to have had an impact? In publishing now, it seems a lot of effort has
been put into producing a 78 page report which is notable mostly for its lack
of useful analysis.
In some ways perhaps it is harsh to
blame the LSB for the timing of the report.
6 months in to the new regime they should have been able to except to
see much clearer signs of what changes the LSA was bringing in its wake, but
this has been thwarted by the funereal pace at which ABS applications are being
processed by the SRA.
Nevertheless, neither organization
has really come out of the first 6 months with much credit so far.
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