Some interesting news articles today:
Council ABS plan aims to take fight to outsourcers
The Law Society Gazette, reported today that a London local authority is considering applying for two alternative business structure licences in a bid to pre-empt local authority work going to commercial outsourcers. The first ABS would be wholly owned by the London Borough of Lambeth, with the possibility of a tie-in with another local authority, and will aim to provide legal services to third-party organisations such as charities in the borough.
The second ABS is intended to be run as a joint venture with a law firm and provide legal services to other local authorities.
Read the full story here.
QASA is cold shouldered
The Law Society Gazette, also reported today that only one in 200 of criminal solicitors who have signalled their intention to practise advocacy in the future have signed up to the Quality Assurance Scheme for Advocates, the Gazette has learned. The Solicitors Regulation Authority said that more than 10,000 solicitors notified last year of their intention to practise advocacy, but that since formal registration opened in October only 50 solicitors have signed up.
Most barristers are boycotting the scheme, with only 12 barristers so far signed up, according to the Bar Standards Board.
Meanwhile, opposition to the scheme by criminal barristers suffered a new setback last week when the High Court refused the claimants permission to appeal its decision to throw a legal challenge out. As the Gazette went to press, it was not known whether they would apply to the Court of Appeal.
The court also slapped the claimants, whose own legal team acted pro bono, with a £150,000 costs bill – ordering them to pay £112,500 towards the costs incurred by the Legal Services Board and £37,500 towards the BSB’s costs.
Read the full story, here.
Law Firm partners dig deep after HMRC national insurance crackdown
Today, The Lawyer reported that the law firm TLT is expected to be amongst the first group of firms to issue cash call to fixed-share partners (FSP) in response to HM Revenue & Customs (HMRC) changes to partnership taxation. In a move that is expected to become indicative of a growing trend across the profession, the firm has requested that each FSP, of which there are 60, contribute £20,000 to the cash pot. In total the firm will boost its coffers by a minimum of £1.2m.
The move will see FSPs invest a percentage of their annual income depending on which salary band they are in. Previously fixed-share partners have not been expected to put any cash into the business and do not have voting rights within the firm. Partners were invited to respond and it is expected that meetings will be scheduled over the coming weeks but a deadline for collection of the funds by the end of the financial year has already been set.
A number of firms are expected to follow suit after HMRC last year vowed to close a loophole that allowed fixed-share partners to be classified as self-employed, resulting in the firm escaping paying national insurance contributions for these individuals.
HMRC published its proposals for changes to the partnership tax regime in December (17 December 2013).
Also today, thelawyer.com says that Trowers & Hamlin have also told their fixed-share partners that they will have to stump up extra funds in the hope of beating the HMRC assertion that they are just employees.
The thelawyer.com article today says that HMRC is expected to issue yet more guidance this week on this matter.
The full story is here.
New planning court gets go ahead to support UK growth
The Ministry of Justice announced last week, here, that key building projects which generate thousands of jobs in communities across the UK will benefit from changes to tackle costly and unnecessary legal delays under plans to speed up and reform the Judicial Review system. Legal disputes over major developments will be fast-tracked for consideration by a new Planning Court which will be established by this Summer, to support the Government’s long term plan for economic recovery.
The move will see an estimated 400 planning cases a year resolved more quickly by being fast-tracked for hearings with specialist judges, instead of clogging the main Administrative Court. It will support the growing economy by reducing unnecessary and costly legal delays which developers have previously blamed for the collapse of potential major building schemes.
Some of the measures will become part of the Criminal Justice and Courts Bill, which has been introduced to Parliament (on 5 February).
There has been a huge growth in the number of judicial review applications in recent years, causing the whole system to slow down despite the fact only a small proportion succeed. Applications more than doubled from 4,300 in 2000 to 12,600 in 2012. Yet, of the 440 which went on to a final hearing without being refused permission, withdrawn or settled in 2011 just 170 went in favour of the applicant. In 2012 the vast majority of applications, more than 10,000, were for immigration and asylum cases – and almost 200 were on planning issues.
Cases often take more than a year to resolve. For planning cases, the average time to resolve an application which went all the way to a final hearing was 370 days in 2011.
ABS licence will give PwC Legal “rocket fuel”, says UK chief
Last week, an article on LegalFutures caught my attention. It mentioned PwC Legal’s alternative business structure (ABS) licence. It will give PWC Legal’s expansion plans “rocket fuel”, its UK senior partner has claimed. PricewaterhouseCoopers last week became the first of the ‘big four’ accountants to become an owner of a law firm, although the Solicitors Regulation Authority has imposed various conditions on the relationship between the two sides. PwC will become a corporate member of PwC Legal’s partnership, currently made up of 22 equity and salaried partners.
Senior partner Shirley Brookes agreed with those describing the move as a ‘game changer’. “Having PwC as an owner gives access to greater investment and allows us to work together to enhance services to clients,” she said. “One of our selling points has always been our broad, business focused approach and the ABS means we can capitalise on this further.”
Read the full story here.
Innovation in private legal sector leads way for access to justice, says report
Another article in LegalFutures said that harnessing the communications power of the digital revolution can go a long way towards filling the access to justice gap created by legal aid cuts, according to a major report. Innovations in the private sector showed that low-cost legal services were possible, and experience in other countries showed government-led initiatives could bring significant improvements “in a time of austerity”, it said.
The report, Face to face legal services alternatives: global lessons from the digital revolution, was written by solicitor and former Justice director, Roger Smith, and Strathclyde University’s Professor Alan Paterson. Mr Smith stressed that any network should be “digital first, not digital only”. Using technology to improve access to justice should not be abandoned because some people – the “digitally excluded” – would be unable to benefit from web sites, for reasons of inability online or “cultural impediment”. For this minority, a face-to-face advice option would be necessary.
Mr Smith said that he and Professor Paterson had looked to overseas models of legal services delivery and had found significant not-for-profit activity in the US, although the private sector was hampered by restrictions on the unauthorised practice of law. He said England and Wales could learn from a state-wide website in New South Wales, Australia, which started with digital assistance, underpinned by telephone advice, and offered face-to-face as a last resort. It was the Netherlands’ example that showed the greatest promise, Mr Smith said. Its government-backed, jurisdiction-wide Rechtwijzer website “raises the bar” and “opens up a whole new world in terms of solving problems”. The site, which is soon to launch its upgraded ‘version 2.0’, worked, he said, “because it’s dynamic and takes you on a journey through a process interactively”.
Read the full story here.
“The world and his aunty” are mulling ABS conversion
Also on LegalFutures there a story, here, about the impact of alternative business structures (ABSs) on organisations with in-house lawyers is likely to be felt most in the third sector, major new research has found – but hundreds of private companies and public authorities are looking at conversion too.
The findings came in a report on the role of in-house solicitors commissioned by the Solicitors Regulation Authority, which analysed existing data and also surveyed 2,013 in-house solicitors and 213 employers. The research revealed that employers have “some appetite” to become an ABS, with around 5-10% of those surveyed at least considering the business case for conversion.
“Applying this proportion to the total number of firms known to employ in-house solicitors would suggest that somewhere between 300 and 700 firms are potentially considering applying to become an ABS,” the researchers calculated. They said this could have “a significant impact on the market for external legal advice”, depending on the size and market position of the organisation involved, although the limited evidence thrown up by the survey was that it did not seem as though very large companies were eyeing up ABS status.
To read the full report, click here.
SRA plans radical liberalisation of CPD requirements
The Solicitors Regulation Authority (SRA) is looking at whether to abolish all of the prescriptive requirements around continuing professional development (CPD) and leave it to solicitors and their firms to decide how best to ensure their continuing competence. In a consultation paper issued last week that aims to move away from the much-criticised ‘tick box’ approach of CPD, the SRA put forward a radical reform that would no longer involve a minimum number of hours, the need for solicitors to make an annual return to the regulator, or the SRA accrediting CPD providers.
Instead, the SRA would rely on existing provisions requiring regulated entities and individuals to deliver competent legal services, and train and supervise their staff. It would be for the entities and individuals to decide how these outcomes are achieved.
The consultation paper said: “Implicit in the requirement to deliver competent legal services is an obligation to reflect on whether the quality of practice is good enough, identify areas for development and ensure appropriate development activity is undertaken.”
The consultation follows publication of the SRA’s ‘Training for tomorrow’ policy statement last October, which in turn followed publication of the Legal Education and Training Review. It runs until 2 April. See here for the consultation.
Read the full story here.