Licensed Body (ABS) Authorisation
What is a Licensed Body?
In 2007, new legislation, the Legal Services Act, was introduced to widen the management and ownership opportunities for law firms.
Law firms are now able to apply for individuals who are not legally qualified to be Directors, Partners or shareholders. Many firms have taken the opportunity to appoint individuals possessing different business management skills, including accountancy and marketing, to managerial and ownership positions to recognise their contribution to the firm. Firms are also able to benefit from obtaining external investment in exchange for a position on the Board or shareholding.
The legislation also allows for law firms to be owned by corporate entities, or parent companies. For some, this has allowed for greater investment within firms and has allowed existing corporate group structures (such as those in the finance and insurance markets) to expand into the legal services market. Firms have reaped the benefits of being able to refer legal work to another company within a group structure and retaining the profit, as opposed to referring this to third-party legal services providers.
In recent years, many firms have sought ABS authorisation to achieve an Employee Ownership Trust (EOT) corporate model. Firms looking to implement this model may need to obtain expert legal and financial advice to ensure all HMRC restrictions are adhered to. Through our years of experience we have developed strong business relationships with these experts and, with confidence, can introduce you to parties we trust to deliver you the same level of service that we strive to deliver.
The prospect for individuals not legally qualified in the UK and corporate entities to become Managers and Owners of SRA-regulated law firms has also enabled international law firms to open offices within the UK, in addition to their current international structure.
This type of authorisation featuring non-UK lawyer management and/or ownership is known as a Licensed Body or Alternative Business Structure (ABS).
For more information about the overall new firm authorisation process, or if you feel an ABS is not the route for you, please see our New Firm Authorisation page.
Applying for Authorisation
Setting up a typical law firm is a daunting prospect, requiring serious investment of time and money. However, an ABS application commonly contributes an additional level of complexity. The application process is complex, requiring large amounts of information on personnel, procedures and business planning to be supplied to the SRA. In addition, non-lawyers and corporate entities must provide detailed information about their regulatory, employment and business management history to achieve individual approval, in addition to authorisation of the law firm. All individuals and corporate entities must also pass the SRA’s Character and Suitability Test, and are subject to criminal and financial background checks.
Delays or hitches in the application process can have a serious impact on your business planning. However, our extensive experience enables us to predict areas of concern for the SRA, allowing us to comprehensively outline the measures to be taken to mitigate any risks and alleviate concerns.
Top tips for applicants:
- Don’t underestimate the time and resources involved
- Provide as much relevant supporting information as you can up front with your application to the SRA
- Avoid unnecessary structural / key personnel changes during the application process.
How can we help?
We have a unique level of experience in this area and each year we help many new firms to achieve SRA authorisation, from traditional sole practices and partnerships to complex ABS structures. We have experience of working with firms with offices across Europe and the Middle East, and those with multiple layers of corporate ownership.
For those organisations intending to apply for approval, we can offer a range of services from preliminary advice on key issues (e.g. separate business arrangements, what documentation and information may need to be provided, how your organisation’s structure and procedures may help or hinder an application) to hands on assistance and support with forms and the application process leading all the way up to authorisation.
Why choose us?
We have acquired unrivalled experience of authorisation applications and maintain a detailed working knowledge of the application process and regulatory framework.
Contact Us
To learn more about our services, and how we can help you to set up a new Licenced Body, please call 01509 214 999, send us an email or complete our free enquiry form.
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