22 Regulation
Regulation Update
As its February I thought I
would kick off the month with a
bit of poetry: “roses are red and
violets are blue, employees are
being taxed and partners are
too” …. You may be aware that
the tax advantages of LLPs are
coming under scrutiny as
HMRCs deadline for sorting out
partners employment status
looms on the horizon. In this
month’s round up as well as
looking at the sensitive issue of
the tax treatment of partners we
catch up with legal aid cuts,
competition for ABS regulation
and the ongoing insurance
conundrum.
Legal Aid Fracas
The on-going fracas for those
involved in the delivery of legal
aid continues with the Criminal
Bar “protesting” (everyone has
been careful not to use the
word strike) on 6 January 2014
for half a day. Everyone knows
serious financial implications
are in store for those legal aid
firms whose crime contract
tenders are unsuccessful if the
government continues to drive
its snow plough through the
sector. Interestingly however a
report co-commissioned by the
Law Society and four other big
hitters entitled “Forecasting
Criminal Legal Aid
Expenditure” indicates that the
Ministry of Justice could
achieve two thirds of the
planned £120 million savings in
the criminal legal aid system
without implementing the
proposed cuts by virtue of a
continuing drop in crime rates.
The Law Society, for now, in an
attempt to sound hopeful,
announced that its campaigning
priorities for the first quarter
include voicing opposition to
the legal aid cuts but it remains
silent about what it plans to do
regarding the vote of no
confidence in December 2013.
Liberalisation of the legal
market
Until recently the SRA was only
one of seven approved
regulators under the umbrella of
the Legal Services Board (LSB)
permitted to authorise and
regulate both traditional law
firms and ABSs which conduct
ALL of the reserved legal
activities listed in Schedule 2 of
the Legal Services Act 2007
(LSA). This gave the SRA a
monopoly and made it the
regulator of necessity for many
entrants to the ABS market.
Now, the LSB’s granting other
regulators approval to become
ABS licensing authorities means
that entrants to the legal market
will have a wider choice when
it comes to deciding which
regulator it is in their best
interests to be governed by.
This could well mark the true
beginning of the liberalisation
of the legal market
foreshadowed by the Legal
Services Act. We can only
speculate how traditio