The Law Society’s council yesterday voted by 54 votes to 16 to approve the Solicitors Regulation Authority’s application to become a licensing authority for alternative business structures.

Law Society chief executive Desmond Hudson said ABS will change the way law firms are allowed to operate.

'The Law Society believes it is right that we should seek to regulate ABS and we want to be certain that the regulatory framework guarantees the same levels of probity and consumer protection that has been the tradition of the solicitors profession.

'The Law Society Council has examined the proposals from the SRA very carefully and voted to put forward the application to the Legal Services Board.

'With the introduction of ABS, law firms will have to consider what the best structure for their business will be.

'An ABS business model will not suit every firm, and over the coming months the Law Society will run a programme of national road shows offering advice and support for the profession.

'We will also issue a practice note on ABS in May.'

Hudson added: ‘I don’t know whether ABSs are a good thing for the profession – we are boldly going where no one has been before. I do know that there are potential upsides and potential risks around them.

'The difficulty of establishing "fitness to own" is one risk. Owners will have access to the quasi-banking status of law firms, which will make ABSs a very attractive target to organised crime.’

He said that the new ‘trading freedoms’ should see ‘innovative business models’ coming forward, although there was no sign that ‘hordes’ of businesses were eagerly awaiting October 2011 and the opportunity to become an ABS.

‘But we do believe that 308 of the country’s 418 legal disciplinary practices, because they have brought a non-lawyer into the partnership, will have to be among the very first to apply to become ABSs,’ he added.

Sole Practitioner’s Group honorary treasure Clive Sutton has called for a postal vote of members, seeking to oppose the Society’s policy on ABSs.

Hudson said that he respected Sutton’s views and those of other SPG members, but disagreed with the call for a postal ballot of the entire profession.

He said: ‘The Society already has established democratic powers – it is called the council. And it is [wrong] to say that the subject of ABSs has not been adequately debated.

'The policy goes back eight years, during which time there have been consultations, when groups could challenge or disagree with the Society’s proposals. There have also been debates in council.’

Hudson added that under the Legal Services Act, ABSs ‘are now the law’ and stopping the Society from licensing them will simply result in the Legal Services Board stepping in to do the job – ‘which is what the law demands’.

Charles Plant, chair of the SRA board, said: 'We are delighted that the application for the SRA to become a licensing authority for ABSs has been approved today by the Law Society Council.

'The SRA remains on track to receive applications from potential ABS from August, and to enable the first ABS to operate from 6 October.

'The application is the culmination of a determined effort by the SRA, working with consumer groups, the Law Society and other professional organisations, the Legal Services Board, and others to deliver a rigorous regulatory system which enables wider choice for consumers while preserving high professional standards.

'It demonstrates the SRA's ability to deliver a reformed regulatory system to a demanding schedule.'

More information is available at the Law Society pages.

In related news, research has suggested that many smaller firms are planning to change the way they manage themselves in preparation for ABS.