What is an Alternative Business Structure?

What is an Alternative Business Structure?

If you’ve heard someone mention an "alternative business structure" and immediately pictured beanbags, smoothies and office dogs, we hate to break it to you — this is not that kind of alternative. In the UK legal world, an Alternative Business Structure (ABS) is a way for law firms to operate outside the traditional mould — and yes, it’s as bureaucratic as it sounds, but also quite revolutionary (by solicitor standards).

What Does “Alternative Business Structure” Actually Mean?

In plain English: an ABS is a law firm that’s allowed to be owned, managed, or invested in by people who aren’t qualified lawyers. Before 2012, UK law firms had to be entirely lawyer-owned. Non-lawyers couldn’t touch ownership with a bargepole. But then came the Legal Services Act 2007, and with it, the birth of the ABS in 2012.

So now, Bob the accountant or Sheila the tech investor can co-own a legal business. It's like letting muggles into Hogwarts, but for legal services.

How Does an ABS Work?

The core idea behind ABS is flexibility. Traditional law firms operate under strict rules — only solicitors or legally qualified folk can run the show. But an ABS allows for:

• External investment

• Non-lawyer partners or directors

• Multidisciplinary businesses (think: legal advice, financial planning, and accountancy under one roof)

To become an ABS, a firm needs authorisation from a regulator — most commonly the Solicitors Regulation Authority (SRA). There’s paperwork. There are rules. There are background checks. But once approved, it opens the door to more modern ways of doing business in the legal sector.

Understanding the Shift

ABSs were introduced to increase competition, improve access to legal services, and drag the profession slightly closer to the 21st century. For the public, it means potentially lower costs and easier access. For law firms, it’s an opportunity to innovate — or at the very least, get a decent CRM system and a marketing strategy that doesn’t look like it was printed in 1997.

They also make sense for sectors where legal advice is just one part of the puzzle. Think estate planning firms that handle wills, taxes, and investments all under one brand. Or insurance providers with in-house legal teams for claims support.

Possible Advantages

For firms, ABS status opens the gates to investment. Instead of relying solely on partner capital, they can bring in external funding — useful for tech upgrades, expansion, or just staying competitive. It also makes joint ventures easier. A business can offer legal services alongside other professional offerings without tripping over legal red tape.

For clients, ABSs promise convenience and often better pricing. Why visit three different professionals when one firm can do the lot? It’s like a legal services meal deal — only less soggy.

Possible Disadvantages

Not everyone’s a fan. Critics argue that introducing non-lawyer ownership could dilute professional ethics — imagine prioritising profits over client care. There are also concerns about accountability. Who's ultimately responsible if something goes wrong — the lawyer or the investor?

Some traditionalists worry that commercial influence might pressure lawyers to cut corners or prioritise volume over quality. Plus, the setup and compliance requirements for ABSs can be more complex than for regular firms — so it's not a shortcut to success.

Examples of ABS in Action

Plenty of big names have gone the ABS route. Co-operative Legal Services was one of the early adopters, combining legal advice with financial products. Slater and Gordon, an Australian firm, entered the UK market via ABS status. Even the AA and Saga dipped into legal services thanks to the flexibility ABS offers. It’s not just quirky startups — mainstream players have jumped in.

Who Regulates ABSs?

The Solicitors Regulation Authority (SRA) is the most common regulator for ABSs in England and Wales, but not the only one. Other regulators include the Council for Licensed Conveyancers, Chartered Institute of Legal Executives, and Bar Standards Board — depending on what type of legal service is being offered.

To get authorised as an ABS, the firm has to jump through a few hoops. This includes naming “non-lawyer managers,” proving they’re fit and proper to own part of a legal practice, and meeting strict compliance requirements. Not quite plug-and-play — but manageable.

Can Any Business Become an ABS?

Not automatically. Your business must provide legal services — and be authorised to do so — for ABS rules to apply. You can’t just bolt “legal” onto a bakery and start drafting contracts with your sourdough. But if your business has the right staff and regulatory cover, ABS status might be an option.

Why Do Some Firms Avoid ABS Status?

While ABS opens doors, it also brings more oversight. Firms must disclose more about their ownership and operations, and they’re subject to tighter scrutiny on issues like money laundering and conflicts of interest. If a firm doesn’t need outside investors or multidisciplinary partners, it might stick with the traditional partnership model and avoid the extra paperwork.

Future of ABS in the Legal Market

ABS has shaken up the UK legal scene and is likely to keep doing so. The rise of legal tech, client demand for convenience, and new business models (like subscription-based legal services) all fit well with ABS. We may even see fully online law firms, or more collaborations between tech firms and legal practitioners, thanks to this structure.

In Summary

An Alternative Business Structure is a law firm that isn’t bound by the old rules about lawyer-only ownership. It allows non-lawyers to invest in or help run a legal business, creating more modern, potentially more efficient service models. Whether it’s a game-changer or a slippery slope depends on who you ask. But one thing’s clear: the legal profession is no longer the exclusive club it once was — and that might not be a bad thing.