Alternative business structures

Alternative business structures, or ABS, has become the accepted term to refer to those businesses providing legal services but which are not solely owned and managed by solicitors. Currently in Scotland, law firms can only be owned by solicitors either as sole practitioners or in partnership with other solicitors.

 

The Legal Services (Scotland) Act 2010, which received Royal Assent on 9 November, allows solicitors to provide legal services via a range of different business models - such as allowing non-solicitor partners, working in partnership with other professionals (multi-disciplinary practices (MDPs)), and minority, up to 49%, of external ownership. The Act is permissive rather than prescriptive legislation to allow increased choice for those running law firms. Traditionally structured solicitor practices will remain.

 

The Act also provides:

• regulatory objectives and professional principles which will apply to regulated businesses and legal professionals
• powers allowing Scottish Ministers to approve and authorise regulators to license legal services providers
• requirements for all licensed providers to appoint suitably qualified persons responsible for ensuring that the business complies with the regulatory scheme and professional principles
• safeguards to ensure that those owning or directing a licensed provider are fit and proper persons