Alternative Business Structures (ABSs) are more likely to innovate and adopt technology faster than traditional law firms, a study has revealed.
The finding forms part of the Legal Services Board’s (LSB) 2018/19 analysis of the legal market.
Praising the impact ABSs have had on the sector, the regulator said they have been proficient in promoting the interests of consumers – despite initial concerns that ABSs could lower the quality of legal services.
ABSs – which were introduced alongside the Legal Services Act in 2007 – enable non-lawyer individuals or organisations to own and invest in law firms. The measure was intended to open the market to innovation, but campaigners against their introduction argued that ABSs could pose a risk to customers and the quality of legal services delivered.
On the contrary, however, ABSs have had a “direct and positive impact”, according to the LSB.
This is highlighted in ABSs willingness to innovate legal services to better suit the legal needs of consumers and adopt technology faster than traditional law firms.
Summarising the impact of ABSs, the LSB report said: “Our view remains that the introduction of ABS continues to have a direct and positive impact, in particular, on the regulatory objectives of protecting and promoting the interests of consumers, promoting competition in legal services and encouraging a strong, diverse and effective legal profession.”
It added: “Their value has been to provide a structure for firms wishing to provide services differently to address legal need.”
Monitoring the effectiveness of ABSs forms just one part of the LSB’s ‘three-year strategic plan’, which also includes implementing the controversial price transparency recommendations made by the Competition and Markets Authority’s (CMA) last year.
Commenting on the report, Neil Buckley, Chief Executive of the LSB said: “This year’s report illustrates our steadfast commitment to securing independent regulation, holding the legal services regulators to account, and ensuring that the legal services market works in the interests of consumers and the public.”
He added: “As we move into the second year of our current strategic plan, we have refined our thinking around the strategic priorities, and developed three new objectives as key markers of our success. Looking back at our work over the last year, I’m confident that the LSB is in a strong position to deliver on all three of the objectives, as well as on the areas of ongoing work identified in the report.”
According to the latest statistics, the total number of ABSs has increased to more than 1,000 as of 31 March 2019.
To read the report in full, please click here.