The Great ABS Experiment in England is Failing, Especially When it Comes to Litigation –
The answer to access to justice is not to be found in letting non-lawyer corporations take over the practice of law.
The AA has joined an ever increasing list of alternative business structures (ABS) and other new legal businesses that have failed to live up to expectations in the legal market.
Acquiring its ABS license in December 2013, the breakdown and recovery specialist boldly stepped into the legal sector, teaming up with national law firm Lyons Davidson to handle personal injury and car accident-related litigation on behalf of its members and customers.
Now two years on, it would appear that AA Law is a write-off.
Also, according to Tom Connelly, AA Law isn’t the only ABS to succumb to the Chancellor’s drastic proposals.
Aussie outfit Slater & Gordon’s share price tanked shortly after Osborne’s damages announcement. The firm — that first floated on the Australian stock exchange back in 2007 — acquired its ABS license in 2012. Hailed as the future of legal services, amid headlines such as “The rise and rise of Slater & Gordon” courtesy of website Legal Futures, the listed firm simply hasn’t lived up to press hype.
Fellow ABSs Co-op and Parabis Group have also had harsh introductions into the legal world.
Granted ABS status back in 2012, Co-op trumpeted plans to offer 100 training contracts annually by 2017. With magic circle-levels of graduate recruitment squarely in the sights of the retail giant, the firm posted losses of £5 million for the 2013-14 financial year, laying waste to their daring training contract plans.
Parabis Group — which was granted ABS status in the same year — was hailed as pioneers of the post-liberalisation legal market services market. But this optimism proved groundless as the private equity-backed personal injury-focused outfit failed to thrive. It is now being broken up and sold in a seven-part pre-pack administration process.
Finally, who can forget Stobart Barristers? The haulier was granted ABS status in 2013 and quickly positioned itself as an alternative to the traditional chambers set-up. Offering access to barristers directly on a pay-as-you go basis, the group’s legal director, Trevor Howarth, trumpeted it as the future while describing criminal practices as “very wounded animals ready to die”. One year on, Stobart Barrister bowed out of the legal market.
In January of 2015, LegalZoom, which is also a non-lawyer corporation, was the first US Company to be approved for licensing as an Alternate Business Structure (ABS) in the UK, and, as of earlier this month, was planning to use Britain as a laboratory for new business models. We wonder if the above current events will have any impact on their success.
We will continue to monitor the legal landscape in the UK and post any new developments as they come.
Again, the answer to access to justice is not to be found in letting non-lawyer corporations take over the practice of law.