Liverpool Law February 14 February 2014 | Page 22

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