Peter Steel and I spent the first part of this week in Toronto at the International Conference of Legal Regulators. This gathering of regulators from around the world was fascinating and stimulating.
One interesting point that arose was the way in which the term "Alternative Business Structures" or ABS has become an obstacle. The term itself came into use with the Clementi Report on Legal Reform in England and Wales. The term is not a feature of the subsequent Legal Services Act 2007 (save for one heading) but nonetheless has become shorthand around the world for the external ownership of law firms.
The difficulty is that ABS can cover a very wide range of scenarios. At the "extreme" end it means "Tesco law" or "Walmart law" where big brands provide regulated legal services. However, the phrase can include more modest arrangements such as multi disciplinary partnerships or allowing the finance director or HR director of a law firm to own a stake in the business or permit employee share ownership schemes. This lack of clear meaning has allowed opponents of regulatory changes to frame the debate around the fear of Tesco Law. A more nuanced debate may lead to a concensus as to what more reforms might be acceptable. Indeed some jurisdictions where there is opposition to ABSs already allow some arrangements which could be described as ABSs such as multi disciplinary partnerships or some limited external ownership.
In England and Wales another issue has arisen about the term. As Paul Philip, the SRA's Chief Executive, explained in Toronto, the term ABS suggests that those firms licensed as such by the SRA are not law firms. He indicated the SRA was likely to stop using the term ABS as it caused confusion.
If I was advising a regulator who wished to consult on potential regulatory changes, I would suggest that the term ABS be avoided altogether and each option be described in more precise terms.