The creation of a university teaching law firm through the alternative business structure model – farsighted or foolhardy? (PM)

by Paul Maharg on 21/06/2015

First up after lunch, Jenny Holloway, Nick Johnson and Jane Jarman (Nottingham Law School, NLS), on a unique venture at NLS integrating clinic and ABS (alternative business structure, cf Legal Services Act 2007, etc)

Why have a legal advice centre?

  • overall educational benefits of clinical legal education
  • professional ethic and skills based education
  • legal practice as an academic discipline
  • wider educational objectives
  • Veblen — ‘a corporation for the cultivation and care of the community’s highest aspirations and ideals’
  • access to justice

ABS in more detail… it’s a firm where a non-lawyer is a manager of the firm, or has an ownership-type interest in the firm.  A firm may also be an ABS where another body is a manger of the firm, or has an ownership-type interest in the firm, and at least 10% of that body is controlled by non-lawyers.  There are details on transitional arrangements etc that are defined under the Act. ‘Special bodies’ are non-commercial/low risk bodies, with protection immediate on ABS licencing.  This comes to an end when at least one LA has appropriate arrangements to licence special bodies, and the LSB makes a recommendation.  There are potential problems with regard to adequacy of capital and adequacy of insurance, for regulators are concerned above all with risk, and with public protection.  Under s106 of the LSA, a special body can ask LA to modify its licensing rules, and/or disapply approval requirements relating to ownership.  But there are no licensing bodies to license special bodies as ABS vehicles.  The LSB is doing research on transitional arrangements.  If we are to be regulated thus later, why not start now?  Very good summary of the situation by Nick and Jane.

Why have a legal advice centre that is an ABS?

  • establishes a ‘law firm’ meaning in this context an ABS
  • regulatory regime in the UK and potential difficulties with s106 LSA
  • defines relationship with parent organisation (eg when presented with FOI requests to the university that may breach client confidentiality rules)
  • academic discipline of the practice of law
  • ptential for the centre to develop as an MDP offering both legal and other services
  • enhances our understanding of the regulatory change.

What’s the vision…?

  • a fully functioning legal pracgice
  • credit and non-credit bearing
  • partnerships (eg with other organisations and buy in supervisory time)
  • public legal education projects — can inlcude MOOCs on aspects which affect individuals
  • a respected trusted source of information that promotes access to resources to enable people to better enforce/understand their rights
  • access to justice laboratory
  • a resource for the ‘cultivation and care of [one of] the community’s highest aspirations and ideals’

How?  See the structure below:

IMG_2758NLS had to:

  • go through university approval processes
  • instruct lawyers
  • set up the company
  • prepare ABS application
  • prepare an iterative process for approval

The cons?

  • cost
  • insurance increased
  • time — more compliance meetings, etc
  • regulatory regime has increased.

The pros?

  • future-proofing, again regulatory environment turning against them
  • innovation — as per s.1 LSA, and in the public good — this is it!
  • reserved activity
  • external partnerships
  • perfect way to teach conduct and compliance
  • an MDP offering other services

Would Jane, Nick, Jane recommend it?  Yes, undoubtedly.

At questions, Liz Curran said very impressive, and a pro would be that it would increase quality of governance.  She mentioned the capacity to do law reform work out of this environment as being a big plus, and I agree.

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