What changes were brought about with the introduction of the Legal Services Act 2007?

The Legal Services Act

What is the Legal Services Act?

The Legal Services Act is the body of legislation which deals with the issue of legal services in England and Wales. Such issues dealt with by the Act can range from the requirements that firms of solicitors are required to posses before they can operate in England and Wales and how the legal institutions are regulated.

The Legal Services Act 2007 received Royal Assent on the 30 October 2007. The reason for the introduction of the Act in 2007 was to bring in certain reforms which were felt necessary for the way legal services are provided in England and Wales.

What is the main purpose of the Legal Services Act 2007?

The Ministry of Justice has stated that the Legal Services Act seeks to reform the way that legal services in England and Wales are regulated and to put consumer interest at the heart of the regulatory framework.

What were the main reasons why reform was considered necessary?

Reform of the legal services market in the UK was considered necessary for the following reasons:

  • To simplify the complex and inconsistent system or oversight regulatory arrangements in the legal services market

  • To provide common standards for professional practice

  • To increase competition, flexibility and choice for the consumer seeking legal services

What were the key changes brought about by the act?

The key changes which were brought about to the legal services market by the Legal Services Act are as follows:

  • A single supervisory body was created called the Legal Services Board (LSB) with the power to oversee all approved regulators in the legal services market such as the Law Society and the Bar Council

  • A single body to deal with the initial stages of consumer complaints about legal services was created called the Office for Legal Complaints (OLC)

  • The creation of alternative business structures (ASBs) in order to allow lawyers to form partnerships with non-lawyers accepting outside investment or being able to operate under external ownership

  • A requirement for professional bodies to clearly separate their representative and regulatory functions

  • Creating statutory objectives and duties for all regulatory bodies

Alternative Business Structures

What is meant by an alternative business structure?

An alternative business structure (ABS) is a structure which enables legal professionals and non-lawyers to share control and the management of a legal practice.  This removes the previous requirement for solicitors only being able to practice in firms wholly owned and managed by other solicitors or registered European Lawyers.

This has at times being dubbed the Tesco Law Reforms as it enables big companies such as high street supermarket chains to enter the legal industry and provide legal services to consumers.

Is there any advantage to the legal industry following this reform?

Following the introduction of alternative business structures creating outside ownership and investment into law firms the following advantages can be seen:

  • Increased access to finance – this will enable potential expansion and investment

  • Increased efficiency and economies of scale

  • As ownership does not solely fall on solicitors those staff who work in the firm in a non-legal capacity will be able to be rewarded with such things as partnerships or share ownership in the same way that legal staff can – this should make it much easier to recruit but also retain non-legal staff

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For more information on:

  • What areas of the legal services are expected to be affecting by the change in the law?
  • What will be the advantage for the consumer when this change in the law becomes apparent?
  • Are there any disadvantages to this provision of legal services?
  • The Level of Service
  • The understanding of various legal issues