Nevertheless, it is a strong incentive for ABS to find new, cost-effective and innovative ways of working when business people or a private equity firm are responsible. Riverview Law is a typical example. Typically, law firms only offer fixed fees for relatively simple work, but Riverview makes the groundbreaking decision to offer companies a wide range of fixed-price services, right up to mergers and acquisitions. This clearly increases regulatory risks for any law firm that decides to test this theory, but also reduces non-systematic risks over time. The subsidiary has the opportunity to acquire parallel companies operating in other areas such as accounting and investment advice. In addition, the fragmented state of the current legal market, combined with ABS, provides a low-risk entry point for a roll-up strategy that could lead to more liquidity as desired by investors and potential outgoing partners. Step 1 – A Smart Plan: Develop Your Business Plan Rachael Eyre says it`s time to look at Alternative Business Structures (ABS) again. Well-known companies have been cautious when it comes to getting into legal services. BT offers advice on car claims, although it plans to expand to other areas, as does car insurance specialist Admiral. Both rely on existing areas of expertise to complement their other services, not to overshadow them.
Part of the skepticism comes from confusion about what ABS actually is. Simply put, an ABS is a structure that allows non-lawyers to have a financial stake in a law firm. This means that existing companies can involve non-legal staff in the game and new businesses can be created on the basis of co-ownership between managers and lawyers (not legally trained). These legal companies may also seek external investments. The legal profession has often been criticized for losing touch with the world of modern economics. Traditional structures stereotypically see klausuranwälte climbing and climbing into a locking system and becoming managing partners without ever having to develop a real business sense. The introduction of ABS is a blow to this traditional system, as it allows non-lawyers to invest in law firms and become partners. This may not be the only way to meet legal or regulatory requirements, and there may be situations where the proposed route is not the best route to meet the needs of a particular customer.
However, if you do not follow the proposed path, you should be able to justify to the supervisory bodies why your alternative approach is suitable either for your practice or in advance respectively. The Legal Services Act 2007 (SAA 2007) allows non-lawyers to own and operate law firms. This practice note provides details on alternative business structures (ABS) regulated by the Solicitors Regulation Authority (SRA) and how you can apply to become one. A planned schedule to achieve the goals at the beginning of a negotiation can avoid future surprises. The relationship would become quite complicated if the new non-legal partners feel that it is better to sell the company in the next seven years, while the management wants to expand organically into new national and international regions or acquire a company that could increase its market share. A report published in the Law Society Gazette dated 8.3.21 indicates that premiums have increased by 5 to 50%, often when companies still have a clear claims history. ABS can be considered riskier than standard law firms, and there are only a handful of insurers looking at starter ABS. We recommend starting this part early, attracting an experienced insurance broker, and having a clear business plan that directly addresses risk areas. Despite the alarmism of lawyers and the media that ABS would give us large companies producing inferior mass legal services, the dreaded stereotype of the “Tesco Law” has been largely avoided. In fact, the supermarket chain has shown no interest in extending its “Every Little Helps” approach to low-cost wills and estates. There are many alternative business structures that law firms need to understand when starting a business. To understand which business structures are allowed, you must first understand which forms are prohibited.
With the exception of washington state and the district of Columbia, the following prohibitions apply. An alternative business structure or ABS is a business entity that includes non-lawyers who have an economic interest or decision-making power in a law firm and provide legal services in accordance with Rules 31 and 31.1(c) of the Supreme Court. According to the Task Force on Legal Service Delivery, the objective of the ABS program is “rooted in the idea that entrepreneurial and non-entrepreneurial lawyers would test a number of different forms of business,” which will ultimately improve access to justice and the delivery of legal services. Complaints against alternative business structures are received, investigated, and prosecuted by the Arizona State Bar Association in the same way as complaints against attorneys. Nevertheless, ABS companies are often a risky business. Matthew Davies, a partner at Wilsons Solicitors, believes that the traditional model of law firms is financially safer and more secure: “The problem with law firms is that we simply cannot take the same risks as ABS, because it is our finances that are at stake. We are not limited liability companies, which makes us more likely to survive. Following the Commission`s definition of an alternative business structure for law firms for the future of the legal profession, there are also certain prohibitions.