Probate just got interesting

The writer John Mortimer once said: “No brilliance is needed in the law. Nothing but common sense and relatively clean fingernails.”

This month the Institute
of Chartered Accountants
(ICAEW) plans to issue the first
licences to enable its members
to undertake probate work
and form alternative business structures (ABSs) under the
Legal Services Act. Interested accountants will need to pass
a two-day course on probate in order to start offering services
to their clients.

Accountants undoubtedly have common sense in abundance, and no one
can doubt the cleanliness
of their cuticles, but is this, plus a
two-day course, enough to allow head-to-head competition with solicitors, and what are the likely long-term consequences for high street law firms?

Single adviser

The ICAEW applied to be
a regulator of ABSs and for permission for its members to undertake probate work as long ago as early 2012. The Lord Chancellor finally approved
the application in March 2014.
The institute has become the
first non-legal body to actually regulate legal services and
form ABSs (although the Institute
of Chartered Accountants
of Scotland (ICAS) and the Association of Chartered Certified Accountants (ACCA) both have permission to regulate probate work, neither has ever done so).

The Legal Services Board
(LSB) has been vocal in the encouragement it has given to the ICAEW, with former chairman David Edmonds saying “it will enable firms to offer a more integrated service to clients who, in non-contentious cases, will be able to use a single adviser”.
He went on to say that this should “have an impact on competition and improve service levels for consumers”.

The board encouraged
the ICAEW to apply for
permission to undertake more
reserved legal activities, with
a view to accountants being
able to conduct all reserved
legal activities by 2020, which indicates that it does not favour the historic divisions between the two professions.

So how many firms of accountants will perform probate work and how quickly? Peter James, head of regulation at the ICAEW, has said that he expects that at least 250 firms
of accountants will start more
or less immediately, and possibly as many as 700 in the first year. James estimates that around 2,000 ICAEW member firms are involved in estate administration.

The institute intends to license ABSs more quickly and more cheaply than the Solicitors Regulation Authority (SRA) and not confine itself, as a regulator,
to chartered accountants. If the institute is successful in getting permission for its members to perform all types of reserved legal activity then, in effect,
the ICAEW and the SRA will
be in competition as regulators.

There is also an indication
that some European firms of accountants are just as interested in legal services and ABSs as their British counterparts.

One-stop shop

Until now, the much vaunted multi-disciplinary practice or ‘one-stop shop’ expected under the Legal Services Act has not really happened. Only a handful of ABS firms could fall under that definition and most have actively avoided it, not least because of the burden of trying to deal with more than one regulator in the same firm.

It looks as though the emergence of accountants
into ABS may change all of this.
The corollary is hugely significant.
If 700 firms of accountants,
or even half that number, start
to compete with high street solicitors for probate work,
then this has a potential effect
on almost all small to mid-size firms. Some solicitors are still able to say that they have not yet felt any significant change to the way they work as a direct result
of the Legal Services Act. This
may well be the point where
that perception starts to change.

A number of solicitors have already pointed out, as has the Law Society, that there is no level regulatory playing field with accountants in areas such as levels of professional indemnity cover, separation of client account and the compensation fund. Neither has the ICAEW
been compelled to split the governance of its representative and regulatory arrangements in the same way that was imposed on the traditional legal regulators.

The LSB doesn’t seem to regard these as very significant issues. The board is much more concerned with developing
its competition and consumerist agenda than worrying about turf wars between professional bodies. We should not be surprised by this, it is that very agenda which the government wishes it to pursue. SJ

Stuart Bushell is managing director of SIFA