Tesco Law and ABS

(Posted on 06/01/12)

Solicitors throughout the UK remain divided on whether or not the Tesco Law was a smart move.

In March, the Tesco law, which significantly relaxes traditional ownership restrictions on legal structures, was passed. It went into effect in October 2011. How well is it doing, though?

The law meant that non-legal entities could own and invest in law firms. From individuals to supermarket chains, the options are endless. In fact, lawyers can now even find their legal firms on the stock market. The government said that the new Legal Services Act would equate to more and better public choices and and Justice Minister Jonathan Djanogly called it a "a landmark day" for solicitors throughout the UK. In October, he said, "Our legal services are already rated among the best in the world, used by millions of people around the globe as well as in the UK, and these changes will set them up to move to new heights. They will enable firms to set up multi-disciplinary practices and provide opportunities for growth."

But not everyone was convinced. Many legal firms were vehemently opposed to these new structures.

Soon, it was announced that the Solicitors Regulation Authority, or SRA, was being encouraged to consider regulating these ABSs. It was said a more streamlined and "straightforward" approach could be had.

So how are things going now that the new year has begun and the dynamic has had a few months to settle? The groundbreaking ideas began to spill forward as soon as the news was announced. There continues to be a growing interest in this particular sector and the relaxed restrictions has removed some of the classic roadblocks that would have prevented this type of growth a year ago.

Today, the Guardian ran a poll with a simple question: "Is Tesco law exciting or a mistake?"

The results were a bit surprising. Two-thirds continue to believe it's a mistake A full 66% said the potential exists for failure while 34% say it's an exciting change.

Of course, this is still in its infancy, but it's sure to be an exciting change in the UK legal sector. Whether it's ultimately a pass or fail remains to be seen, but like many grand ideas, it's sure to ultimately either soar high or fail miserably.