Law centre submits first Alternative Business Structure application

Legal Futures website reports that Islington Law Centre is on course to become the first owner of a not-for-profit alternative business structure (ABS), subject to receiving Solicitors Regulation Authority (SRA) approval. The venture is an example of government-approved efforts by law centres to mitigate the effects of legal aid cuts enshrined in the Legal Aid, Sentencing and Punishment of Offenders Act 2012, by introducing paid-for services alongside the traditional free services. If granted, the ABS will pre-empt the SRA’s licensing regime for so-called special bodies/non-commercial organisations – which will not be in place until April 2014.

Islington Law Centre submitted its detailed stage two application to the SRA in September and hopes its subsidiary community interest company will be granted an ABS licence in time for legal aid scope changes from next April 2013 – in particular in immigration and employment.

Ruth Hayes, the centre’s director, said that the ABS application process has been complicated by the fact that its proposed ownership structure departs from the norm of a law firm or commercial business. She said, “Because the law centre is itself a charity and thus doesn’t have owners, we’ve found the process slightly complex. In the end all our trustees were treated as owners, even though they have no beneficial interest in either of the companies.”

She said the purpose of the ABS would be fourfold:

* to provide legal services in key areas of law to people who can afford to pay something when those areas go out of scope;
* to use any surplus generated to cross-subsidise the law centre’s work;
* to help keep legal expertise available to the centre;
* to maintain the centre’s fee-charging business at arm’s length from the centre’s free service.

For more on this new approach, see Law centre submits ABS application as not-for-profit sector gears up for legal aid cuts