Changes to the Legal Services Act 2007: What Does it Mean for HR Professionals?


The moment the Legal Services Act 2007 introduced the concept of alternative business structures (ABS) the media immediately jumped on the news, declaring the end of traditional law firms. It was predicted that the provision of legal services in England and Wales was on the point of radical transformation, with businesses across many sectors, providing they were deemed 'fit and proper', about to take hold of the industry.

Changes to the Legal Services Act 2007: what does it mean for HR professionals?

The assumption was that anyone could obtain expert legal advice almost anywhere and at any time, even at the likes of high street stores such as Tesco, or through insurance providers.

Despite the hype, the reality was that the introduction of the ABS was more of a weak fizz than a bang.

The sections of the Act which cover ABS are so caught up in red tape that traditional firms remain the main providers of legal services. In July this year, however, various proposals were put forward to the justice minister to relax the strict controls around ABS to make it easier to compete with traditional law firms.

These proposals include changes to Schedule 11, which would move to a principle-based approach to cut costs, as the current regime assumes ABS' are more risky legal service providers. Regulators would also like to have more discretion over appointments, as currently a non-lawyer wishing to join ABS is faced with a staggering 21 pages of requirements.

So what does all this mean for the HR officer? Not much, as it turns out.

Employment law is one area of law where businesses have been able to obtain advice from unregulated HR consultancies for decades. The fact that an individual does not need to have rights of audience to represent either party at an employment tribunal, plus the relatively low risk of costs being awarded, has meant that a number of these businesses have surfaced over the years and presented traditional law firms with stiff competition.

For the HR officer who has to keep a close eye on the budget, the offer of a low monthly fixed fee for employment law advice is certainly appealing. With so much competition in this area, the notion of waiting a few days for a solicitor to come back with a letter and a bill for £500 have been kicked to the curb. Now, HR professionals are enjoying the benefits of 24-hour advice, fast turn-around, and having access to low-cost advice for even the most minor of issues.

The clear pitfall that HR professionals should be aware of is that these consultancies are unregulated and the quality and experience of those providing the advice can vary considerably. There have been many complaints that such firms have provided conflicting advice, or lacked the skills or experience to adequately represent their clients before the employment tribunal, leading to wasted time and expense along with the public embarrassment of adverse findings. In addition, the low monthly cost is coupled with a long contract meaning clients are stuck with a firm they have little to know faith in.

Given the needs of the commercial client to be able to turn to one business for all their legal needs, it is easy to understand the appeal of a 'one-stop shop' from an already familiar brand. Even under the new proposals, however, ABS will have a duty to ensure advisors are competent to deliver the legal advice, have procedures in place for dealing with conflicts of interest and complaints, and have to uphold the principles that the legal services profession have been founded on.

Cutting the red tape in the Legal Services Act 2007 may mean that more regulated legal providers will be available, giving a business the benefit of cost-effective and accessible advice with the quality assurance and ethics that traditional law firms have offered. It is important to remember, however, that a dramatic move away from the way legal services are provided does not necessarily guarantee success. Since its establishment, the legal profession in England and Wales has proven a success.

In the light of changes not only in the legal profession, but also in clients' expectations, forward-thinking law firms have happily stepped up to the plate already. More and more firms are offering clear, fixed fees or insured advice packages in response to the changing demands. There are benefits to firms in engaging clients for a monthly retainer and working with them to develop a productive working relationship. Legal firms are going from a reactive service to providing a more proactive and customer-focused approach in order to secure clients.

Therefore, the bottom line is, while the legal sector is changing, fast, many law firms and service providers are creating solutions which in fact help make the law more accessible. For HR professionals, the fact that another offering is on the table and is due to be improved, simply presents an alternative. Of paramount importance, however, is ensuring you employ a provider you trust and know you can rely on.

News Archive

Get In Touch