Lifting of restrictions on solicitors having links with outside businesses, which have been removed following a rule change agreed by the Solicitors Regulation Authority earlier this month, could open the floodgates for the setting up of professional advisory one-stop shops.
Changes to the Separate Business Rule - which means solicitors can own or be connected to separate businesses providing non–reserved legal services - were agreed by the SRA board on 3 June.
The original purpose of the rule was to prevent solicitors having links to separate businesses outside the remit of regulation, but the opening up of the legal market via the 2007 Legal Services Act already allows other types of businesses to own law firms and deliver other services.
All law firms will be able to own separate businesses allowing them to compete on a level playing field with alternative business structures, making it easier for those firms to compete across all professional and advisory services.
The changes still need the approval of the Legal Services Board but, if agreed, will be part of the latest SRA handbook when it goes live on 1 November.
A spokesman for the regulator added that this creates the possibility for tie-ups of all kinds, with legal firms now able to buy into financial advice and accountancy, much like advisers and accountants have moved onto solicitors’ turf in recent years.
Stuart Bushell, managing director at adviser and solicitor professional services firm Sifa, told FTAdviser that this change means that legal firms can setup divisions that include non-reserved activities, with will writing being the most obvious new avenue for business.
“This change will increase the number of joint ventures and multi-discliplinary practices, I think the boundaries will really begin to blur.”
He added that this was just the push solicitors needed, because in the last three years their numbers have dropped by 1,200 as other sectors muscled in on their work.
The more pro-active in the industry have sought to set up their own referral relationships and joint ventures, and in recent weeks there has been further evidence of these moves taking shape.
Vince Smith-Hughes, head of business development at Prudential, told FTAdviser that there has been a “huge amount” of activity in this area over the last 12 months, pointing to the recent reforms with regards to death benefits being a “game changing” opportunity for advisers to help the legal profession.
He said: “Accounts also offer opportunities for advisers to form partnerships, particularly with changes to company investments, so I think it’s a good time for advisers to look at expanding their professional connections.”