Will barrister ABSs lead the way for innovation?

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(First published in October 2017 in Thomson Reuters ‘Innovating the Bar’, No. 4, October 2017, here.)

The Legal Services Act 2007 introduced Alternative Business Structures (ABSs) to much fanfare, with predictions of the transformation of the legal market by allowing non-lawyer owners and investors. In April 2017, the Bar Standards Board (BSB) received authorisation to license Alternative Business Structures (ABSs) (‘licensed bodies’). It has been regulating lawyer-only owned entities (‘authorised bodies’) since 2015, but the new powers gave it the ability to extend ownership to businesses jointly owned by lawyers and non-lawyers.

What does this mean for the Bar? Will ABSs act as a catalyst for the traditionally-conservative Bar to develop new, cost-effective ways of working? Open the way to technology investment, to innovative partnerships, and widespread change?

In a previous article, ‘First BSB ABS a ground-breaking collaboration between barristers and football agents’ (Innovating the Bar, No. 2) we looked at VII Law’s innovative partnership between barristers and football agents, and about how ABS status enables ‘Brand Bar’ to act as an imprimatur offering trust to the provision of wider, previously unregulated services. In this article, we look at more widely the reasons why some other first-mover organisations have embraced ABSs, and at what this is likely to mean for the Bar as a whole.

Why have organisations embraced BSB Licensed body status?

As of 1 September 2017 we have seen four licensed body ABSs approved by the BSB, with VII Law, Minerva Law, and ShenSmith Law at the forefront of the charge. Although a number of other organisations have been talking about applying for licensed body status, it is as yet unclear how many will apply. The BSB has only registered 72 authorised bodies, and its public statements have been cautious about appetite for licensed bodies. Cautious take up may mirror that of the solicitors’ profession where the ‘Tesco Law’ stereotype has largely not materialised, licenses instead going to existing firms with a drive to extend partnership to non-lawyer staff.

Working with other professionals and business people

Some new ABSs exist because of a wish to work in specialist areas with other non-legal professionals. This was the case with VII Law. It is also the case with Minerva Law, run by Dr Lorraine A. Newbold. Dr Newbold has been providing legal services to the financial services industry – principally in the area of derivatives and regulatory reform relating to derivatives – from traditional barristers’ chambers for over 13 years. However, Dr Newbold’s previous experience as general counsel within investment banks had led her to appreciate the importance of working holistically across disciplines alongside professionals, such as tax, accounting, business, operational, and IT specialists. Newbold is keen to see the ABS as a platform for a wider financial services consultancy with the ability to provide legal services at its core:

‘The ABS structure could be a mechanism for providing a more comprehensive range of services to the financial services industry. I am frequently engaged to work on a project for a financial services client and am asked whether I can provide a broader range of services but under the traditional bar structure this is not possible. We hope that by having established Minerva Law Limited as a licensed body we will be able to build a team of people to work with us and we hope to provide a more comprehensive range of services to the financial services industry.’

ShenSmith Law, one of the other first licensed body entities to be authorised, also sees barrister–business collaborations as playing an important role in the growth of the modern Bar. However, rather than focusing on collaboration with other professionals to serve a niche specialist market, ShenSmith Law sees leveraging business experience as a way for barristers to relieve themselves of administrative and marketing burdens and to focus on their core legal competencies.

Moving beyond the traditional barrister space

But, for ShenSmith Law, ABS status does not just provide the skills to help barristers with marketing and practice development. Its marketing engine enables barristers to gain new sources of public access work, enabling barristers to move beyond traditional barrister spend into the wider £32bn market for legal services.
The BSB’s recent report shows clients’ evolving needs as a key driver for barrister innovation, as noted by Daniel ShenSmith in his recent blog for the Bar Council. ShenSmith Barristers was well known to have been founded as a result of its founders’ experience as a client of traditional legal services and the direct access bar. The new ABS, ShenSmith Law, builds on ShenSmith Barristers’ work to simplify the client experience. It provides the necessary legal support for the client who may otherwise lack the ability to enforce their rights due to prohibitive costs of the solicitor-barrister referral model and the confusing legal landscape. The new ABS structure will enable ShenSmith Law to extend its model, providing the benefits of direct access while keeping costs to a minimum, but also with the litigation authorisation, and the ability to instruct any member of the bar, to provide full continuity. In this way, it looks set to combine the strengths of the Bar with the support of a traditional law firm.

Technology

External ownership facilitated by ABS structures has been spoken of previously as a way to gain investment to engineer technology that can be used to reimagine the legal process. As yet, we have not seen any entity set up with this as a key aim, although there are a number of organisations innovating with technology for whom this may be a full or partial driver. ShenSmith Law, for example, is currently looking to launch DigitalBar.co.uk, website packages for barristers that will include hardware and firewall protection with a professional look and feel and incorporate unlimited storage and email addresses.

All change? What will this mean for the Bar?

On initial appearances ABSs are unlikely to lead to dramatic change for the Bar. Clients’ changing expectations will continue to drive incremental as well as more dramatic change.

Many barristers – in established sets serving traditional large and medium-sized solicitors’ firms – are unlikely to need to reinvent the wheel or to rethink their business model. Their innovations are likely to come about incrementally, via changes to fee regimes, improvements to client service, or via gradual adoption of more modern technologies. For many of the larger firms instructing them, the Bar remains the ultimate in outsourcing, a cost-efficient method of accessing high-quality, specialist advice, even if some firms would like to see a more converged profession.
For other areas of the Bar, for practice areas where working with other professionals is already a feature of modern practice, for chambers affected by legal aid pressures, for those looking to develop a practice based more around a particular niche, or for those wanting to embrace technology more fully, ABSs may prove to be a way to deliver a range of innovations. They may also pave the way for other changes: while some of these are as yet unanticipated, as ABSs become approved training organisations, they may also prove a way of opening up the profession to entrants previously denied access by low pupillage numbers dictated in part by the traditional chambers pyramid structure.