Lords set ABS on schedule for early 2012

The SRA is set to begin granting its first alternative business structure (ABS) licences in early 2012, now that the House of Lords has approved legislation regulating the disclosure of criminal convictions for non-lawyer owners of ABSs. As reported in Legal Futures, the Lords also passed legislation making the Solicitors Disciplinary Tribunal the body through which appeals can be made against SRA decisions regarding ABS licences, in a move that seeks to ensure consistency in the regulation of all firms, regardless of traditional or ABS status.

Despite pressure from the Law Society, there will not be an exception to the Rehabilitation of Offenders Act 1974 which would force all non-lawyer owners and managers of ABSs to disclose any convictions. As the law stands, only those owners with at least a 10% share (a "restricted interest") in an ABS will be required to reveal convictions to pass the SRA's fitness-to-own test. However, if deemed necessary by the SRA in conjunction with the Legal Services Board, the 10% rule which defines an owner's material interest could be lowered in the future.

Justice Minister Lord McNally endorsed the move, saying that it allays concerns that ABSs could be at the risk of criminal ownership: "It effectively captures those who might pose a risk of improper management of firms providing legal services, including the risk of the exploitation of access to client money." However, he went on to want the government: "Be mindful of the careful balance between access to information about spent convictions and the important goal of improving access to employment for offenders who have proven that they have put their criminal lives behind them."

Labour's justice spokesman, Lord Bach, gave support to the decision on the basis that ABSs must "[get] on the statute book in one way or another", and agreed that a single body hearing the appeals of all firms, regardless of ABS or traditional status, was "an attractive proposition".