ABS countdown | The accountants are coming – or are they?

There are, somewhat surprisingly, ten legal regulators approved by the Legal Services Board. Those solicitors who would welcome another one should form an orderly queue. The massed ranks who would welcome the Institute of Chartered Accountants in England and Wales (ICAEW) as number eleven might be rather short and the Law Society will not be supplying refreshments. This is more or less where we are with the institute's application to the LSB to regulate probate services and to become only the third of the eleven to license ABSs.

The ICAEW's application to become '¨a regulator of probate services and ABSs was submitted to the LSB in December 2012. In May of this year the Law Society delivered a long letter to the LSB, protesting that, if the LSB were to allow the application, it should also insist on the Institute separating its regulatory and representative functions, as the Law Society, Bar and other legal regulators had been obliged to do. The ICAEW responded in an indignant manner and relationships between the two bodies appear to be in their worst state for many years.

Canny approach

Unbeknown to most lawyers, two accountancy bodies - the ICAS and ACCA - have been approved legal regulators for probate work for several years. However, neither of them seems to have got down to creating the required new rules for LSB approval which would enable them to license ABS. The ICAEW adopted a more canny approach to the whole matter. First, the institute expressed no interest until the LSB was well established and ABS already a working reality, so as to ensure that it would not have to pay a contribution to the LSB's start-up costs. Secondly, it consulted its members on what they wanted and on how many would take up the legal services option if it was available to them.

Based on responses to this consultation the ICAEW decided on a twin-track approach to allow accountancy firms to conduct reserved legal activities. Either firms of accountants would become ABSs, with some of the owners and principals authorised for probate work; or alternatively firms and all of their owners or principals would be authorised.

The institute's research indicated that around 250 firms of accountants were likely to seek accreditation if the LSB gave the green light. Around 150 sole practitioners would be likely to become authorised firms and approximately 100 larger firms would probably take the ABS route.

The ICAEW's executive director for professional standards, Vernon Soare, has been keen to identify consumer benefit, saying "...we recognise the importance of widening consumer choice in the legal services market and of protecting the consumer through effective regulation". Rather more contentiously, in light of accounting scandals in the last twenty years, he also claimed that acting in the public interest was "built into accountants' DNA". However, the ICAEW views non-contentious probate work as relatively straightforward, and contends that it is usually undertaken by lay people without formal training. With that in mind, it would require accountants to undertake a course of just three or four days' duration in order to be eligible.

Few MDPs

It is curious that, as has been mentioned previously in this column, multi-disciplinary practice (mdp) ABSs have not yet taken off, especially given the nature of the debate before the Legal Services Act became law, when many observers thought mdps would be the dominant type of ABS. It was expected that accountants would take the lead in this. In fact there is only a handful of mdps in the first 200 ABSs and only two of these are actually firms of chartered accountants. The second of these, Brookson Limited, which received its ABS licence in mid-July, includes its desire to undertake probate work as part of its SRA authorisation. However, both ABS accountancy practices have emphasised that they had no intention to compete in the wider legal market, simply to enhance their existing legal services.

So the involvement of accountants in ABSs stands at a crossroads, its future determined in the first instance by the LSB's tricky decision on whether to agree with the ICAEW or the Law Society. In the meantime, the rapid development of new competition from outside the professions, such as the remarkable progress of Eddie Stobart, may already be causing the legal earth to spin off its axis. Now that Stobarts have announced a solicitor-based ABS as part of their armoury, their approach to capturing a chunk of the legal services market is well-set and may prove to be a blueprint for other external providers. In the long run, this may prove just as important as whatever happens with accountants.