Delay Hits 'Tesco' Law

A major landmark in the sweeping deregulation of the UK legal profession that offers promising opportunities for paralegals will be delayed while the Solicitors' Regulation Authority awaits parliamentary approval.

Haggling with the Ministry of Justice over the details of alternative business structures (ABS) means the solicitors' body will still not have the power to license these by the long-awaited 6 October launch date.

The MoJ is hoping to give the green light by the end of the year, and the SRA now expects to start licensing in early 2012, enabling groups such as the Co-op to kick off the high street legal revolution.

A war of words about the delay broke out in early September when Professor Stephen Mayson, director of the Legal Services Policy Institute, branded the inability to meet the target date for launching ABS, which enable legal services providers to be owned by non-lawyers, as a "shambles".

His comments forced SRA chairman Charles Plant to deny strenuously that his authority was responsible. The SRA says the delay was caused by the need to finalise details of appeals in cases where a licence is not granted and provisions allowing the SRA to check spent convictions.

It says it has had "firm discussions" with 50 organisations looking at becoming ABS and insists that it has the administrative capacity to deal with all applications within statutory deadlines. An SRA spokesman said: "The ABS team is well set up to deal with whatever number of organisations contact us."

Some legal professionals were expecting a scramble among supermarkets to take advantage of ABS and the Legal Services Board has reported high interest among banks and private equity houses.

However, while reports about the latest delay suggested some firms were angered by the hold-up, leading supermarket chains and banks are in fact showing little interest. Spokesmen for Tesco, Sainsburys, NatWest bank and Lloyds TSB all said they had no plans to offer ABS services.

In 2009 Bloomberg reported that the 2007 Legal Services Act that created ABS had prompted private equity funds to consider investing in UK law firms and that Lyceum Capital, a London-based leveraged buyout firm, might also invest in other legal services models. However, a Lyceum spokesman asked last week whether it was pursuing ABS declined to comment.

The Co-op is the only major high street chain so far to commit itself publicly to applying for ABS. When Co-operative Legal Services was launched in 2006 it planned to employ 150 people within five years - but it has grown rapidly and now employs 400.

Customers are serviced through a call centre in Bristol but a pilot project in June offering legal advice at branches of the Co-op and Britannia banks is to be extended. Although this pilot pioneers existing legal services provided by the Co-op, ABS would enable it to expand these significantly.

A Co-op spokesman said they were aware of the latest delay, adding: "We're still working to set up an ABS and we will work around whatever the new timetable will be."

Other organisations that have reportedly expressed an interest in deregulation include insurer Abbey Protection and Yorkshire law firm Last Cawthra Feather in association with Freeserve founder Ajaz Ahmed.