Alternative Business Structure (ABS) and New Law Firm Applications to the SRA

Working with solicitors and investors to set up new solicitor firms and alternative business structures (ABS) is one of our favourite things to do. Our consultants are experts in managing the process for SRA authorisation from start to finish. Your consultant will guide you on structure, check you meet with minimum SRA requirements for authorisation, draft your application documents, draft your compliance systems, enrol you on e-learning where needed and work with the SRA to get a swift approval.

SRA Authorisation ABS and New Law Firm Project Planning Image
SRA Authorisation ABS and New Law Firm Process Image

What is the process to set up an ABS or new law firm?

Step 1: Get the law firm / ABS structure right

One of the first things we do with our clients, whether it be a traditional solicitor’s firm or an alternative business structure (ABS), is to work out what regulatory structure best suits the client. Your consultant will work with you to agree who is going to hold key compliance roles (such as COLP, COFA and ‘qualified to supervise’) and agree your structure for the SRA authorisation application.

Step 2: Get a solicitors professional indemnity insurance quote

The SRA will not even look at a new law firm or alternative business structure (ABS) application unless you have a professional indemnity insurance quote which meet’s the SRA’s ‘minimum terms’ of cover. We can provide you with some templates to assist in the process and put you in touch with brokers who can guide you on this crucial step.

Step 3: Draft SRA Application including Form FA1 & FA2

The SRA’s form ‘FA1’ is the main applicant body application document whether an alternative business structure or a traditional solicitor’s firm. An FA2 is needed for any individuals in the business requiring SRA approval (exemptions may apply such as under 13.2 or 13.3 of the SRA Authorisation Rules). Depending upon the nature of the firm your consultant will guide you on whether further SRA forms must be completed. While the SRA no longer require sight of a full office manual for every new solicitor’s firm or alternative business structure application they continue to frequently ask questions about the proposed compliance and training systems which will be in place. Your consultant will draft a bespoke office manual procedures to suit your business model and guide you on systems and training.

Step 4: Submit SRA application and prepare for launch

100% of the applications which we have submitted to the SRA to date have been successful and so we know that upon submission of the application to the SRA we need to get ready. All solicitor firm and alternative business structure (ABS) clients receive access to our suite of e-learning (COLP & COFA duties, SRA Code of Conduct, Anti-money Laundering, GDPR, SRA Accounts Rules) to refresh or update knowledge. For new law firms this can really help the application process in terms of reassuring the SRA that you are ready to practice on your own.

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Submission of SRA ABS and new law firm applications to the SRA Image
SRA ABS and new law firm authorisation success image

Step 5:

 SRA Authorisation!

Why work with us?

Unrivalled SRA authorisation expertise & a proven track record

Most of our new law firm and alternative business structure (ABS) SRA applications are dealt with by Andy Donovan. Andy has over 10 years of experience in SRA regulation having worked both inside and outside of the regulator. While working at the SRA Andy led on on the development of several aspects of the regulator’s approach to the regulation of ABSs and his commentary on the professional rules of conduct is published by LexisNexis. Andy loves working on new law firm applications. Get in touch for an informal and confidential chat.

Andy Donovan

Law firm & ABS SRA Application Specialist Consultant & Director

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Success rate for SRA Applications

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Streets are a top 40 UK firm of Chartered Accountants who have recently set up a corporate and commercial legal ABS. Andrew took us through the authorisation process impeccably. His experience was invaluable in making the process very straight forward. Going forward The Compliance office will be supporting us in ensuring continuing SRA compliance . I cannot recommend them enough.

Paul Tutin, Streets Chartered Accountants

Andy’s service, knowledge and ability has been first class. He has guided my Law Firm through a successful ABS application with great diligence and competency. His experience with the SRA places him in a very unique category of consultants in this sector and I couldn't recommend his services highly enough. We will continue to work with Andy off the back of the help and value he has brought to our business so far.

Jack Thompson, Philipson Hardwick Solicitors

I highly recommend Andy Donovan of The Compliance Office, he has provided an excellent service in relation to seeking SRA authorisation. He is professional, efficient, knowledgable, and thorough in his approach. He ensures that you understand each stage of the process and keeps you fully updated at all times. His expertise is well worth the payment for his service, I would have found the application rather daunting without him!

Natalee Worthington, Worthingtons Family Law

"Superb service delivered in a timely and approachable manner. It feels good to have someone as knowledgeable and approachable as Andy on board. The Compliance Office came on recommendation to me and I will no doubt be recommending it myself."

Marta Williamson, Your Local Solicitor Ltd

"Thank you so much for your help during the process – your input when I was replying to the questions over Christmas was particularly valuable, as was your precedent compliance manual…"

Amy Cunningham, Cunningham Legal

"Excellent work in terms of preparation and strategy… Well done for achieving the desired results in a short space of time"

Speed up the SRA authorisation process and save on your time

Average number of days to SRA authorisation (July 2019)

How do we manage to achieve quicker results?

Our fastest law firm authorisation to date:

days from SRA submission

Having worked with and trained SRA staff we have a good understanding of what they are looking for in an application. We tackle the issues up front in our applications and set out how any potential concerns are being addressed. As experts in this area our consultants have existing knowledge, templates and strategies to make swift process. This saves our clients hours of time allowing them to focus on getting the business up and running.

days from SRA submission

What is an alternative business structure?

Get a quote for SRA authorisation

Call 01789 868444

 

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SRA Application Service frequently asked questions:

Am I eligible to authorised by the SRA as a law firm / alternative business structure (ABS)?

In order to be eligible for SRA authorisation as a solicitor’s firm or alternative business structure (ABS) you will need:

  • at least one Director / Partner who is a qualified lawyer such as a solicitor, barrister or Chartered Legal Executive;
  • at least one lawyer (and it could be the same individual) who is ‘qualified to supervise’ the legal work in the firm. That does not necessarily have to be the owners / directors / partners of the business but all law firms need someone with 3 years experience as a qualified lawyer and (until the requirement is scrapped in November 2019) 12 hours of management training;
  • a practising address in England & Wales. From 25 November 2019 non-ABS law firms will also be eligible if they have a practising address within the UK;
  • to have been formed within Europe (if a company).

For those wishing to set up as an alternative business structure (ABS), on day one of your proposed launch date you will also need at least some form of non-lawyer ownership or directorship, even if this is a separate limited company set up to hold one share.

As part of the SRA authorisation process you will also need to satisfy the SRA that:

  • you have managed to secure a professional indemnity insurance quotation which meets the SRA’s minimum terms for law firm / ABS cover;
  • you have a Compliance Officer for Legal Practice (COLP) and a Compliance Officer for Finance and Administration (COFA) in place to facilitate and monitor SRA compliance in the firm. The COLP must be a lawyer. The COFA does not need any particular qualification.
  • you have systems and policies and procedures in place to comply with the detail of the SRA’s regulatory requirements for law firms;
  • the Directors (or members in an LLP or partners if a partnership), COLP, COFA and owners are all ‘fit and proper’ and suitable to hold these roles.

In our first meeting with you our consultant will check that you are eligible and guide you on your structure. We will connect you with an insurance broker as soon as possible because a quotation for professional indemnity insurance must be attached to your SRA application. Your consultant will prepare a comprehensive suite of risk and compliance procedures for you tailored to SRA standards and prepare the necessary SRA authorisation forms for you.

What is a COLP and a COFA?

Can an alternative business structure (ABS) be 100% owned by non-lawyers?

Yes, absolutely. As long as you have a lawyer at the Director level (or member for an LLP, partner for a partnership) you will be eligible for SRA authorisation as an alternative business structure (ABS).

Do I actually need to become a law firm to offer legal services?

The SRA is relaxing its rules on who needs to become authorised as a solicitor’s firm or alternative business structure (ABS) from 25 November 2019. Freelance lawyers can provide some services as a sole trader and in-house lawyers can provide certain services to the public. Nonetheless you will most likely still need to become a law firm if you want to set up a business providing legal services and do any of the following:

  • describe the business as a law firm, solicitor’s firm or similar or use the word ‘solicitors’ in the business name;
  • offer certain restricted legal services such as litigation, advocacy, conveyancing, probate, administration of oaths, immigration advice or exempt financial services provide reserved legal activities;
  • hold client money as a solicitor or a solicitor’s firm.

‘Freelance solicitors’ with 3 years experience can provide some of the restricted activities listed above and hold a very limited category of client money but they are unable to employ anyone or incorporate.

Owing to these limitations, setting up a law firm is still the go-to for most. However, if you think you might be able to benefit from the new ways of working feel free to drop us a line and we would be more than happy to guide you further.

Will the SRA want to see a business plan?

The SRA no longer request sight of a business plan for all SRA authorisation applications. However in order to secure a professional indemnity insurance quote for your law firm you will need to supply the professional indemnity insurers with a business plan. Get in touch if you would like a business plan template.

How much does it cost to set up a solicitor’s firm or an alternative business structure (ABS)?

Like any other business, the cost of setting up a law firm can vary greatly. However most firms will need to consider the following common costs (in order of expense!):

  • typical business expenses: office space (if you choose to make use of an office that is), staff costs, website set up, IT hardware, IT support, company secretarial services, accountancy services, stationary etc;
  • professional indemnity insurance (PII) – Law Society research suggests that once up and running the average law firm spends about 5% of its turnover on PII cover. We typically see premiums lower than this in year one but nonetheless the insurance premium tends to be one of the biggest costs in becoming a law firm;
  • SRA authorisation fees – the SRA charges new law firms a fee for regulation for the coming year (at the time of writing between circa £400 and £2,600 depending upon when in the year you apply and if you hold client money). ABSs also have to pay an application fee which varies depending upon how many new people need to be approved by the SRA. Your consultant can guide you further once we know a bit more about your business;
  • Individual solicitor practising certificate fees, if recruiting a number of solicitors and choose to pay for those (it is fairly typical to do so).

Our fees depend upon how complicated the application is likely to be. We offer monthly plans as well as fixed fees payable in stages. Get in touch and we can provide you with a definite figure.

Will the SRA want to see an office manual of compliance procedures?

The SRA no longer require this in every case. However, typically the SRA will expect to receive some reassurance that such procedures are being prepared and may well ask for sight of certain documentation depending upon what concerns if any they have upon reviewing the application. Our consultant will prepare these on your behalf as part of our SRA authorisation service.

Do I need a professional indemnity insurance quote before submitting my application for authorisation to the SRA?

Yes. Whether a traditional solicitor’s firm or an alternative business structure, you will need at least £2 million (£3 million for companies / LLPs) of professional indemnity cover. The SRA do not consider an application for authorisation complete unless it is accompanied by a quote from one of their accredited insurers. Most firms can secure cover at a viable rate but we encourage our clients to secure a quote early on because occasionally this can be significant obstacle. Your consultant will connect you with an insurance broker best suited to assist. In order to secure a quotation you will need to complete an insurance proposal form and also provide:

  • a short business plan – our consultant will provide you with a template to get started and assist with the sections on risk and compliance;
  • financial projections for at least year one (preferably to year three). The idea is to set out anticipated income and outgoings month by month in year one at least;
  • CVs for key people in the solicitor’s firm / ABS (the solicitors especially).

It normally takes 7 – 14 days to receive the insurance quotation and your consultant will use that time to draft and agree with you the SRA application. We do have some examples of the key documents for the insurers and also broker contacts we are happy to share, just get in touch.

What does the SRA mean when it uses the term ‘manager’ or 'principal'?

This simply refers to the partners in a law firm partnership (equiry and salaried), the members of an LLP and the directors of a company.

How do I get started?

Simply email us your contact details or give us a call on 01789 868444. We would be delighted to arrange a discussion on the best model and approach for your business.

Call 01789 205072 | contact@complianceoffice.co.uk