We are noticing a trend of law firms encountering issues with their authorisation following changes to their management and ownership structures. This can have serious consequences for the business. We recently saw a case where a non-lawyer was issued a small number of shares in a ‘traditional’ recognised body law firm, which led to the loss of the firm’s authorisation and will require re-authorisation by the SRA.
If you are appointing non-lawyer directors or shareholders (including entities) to a ‘traditional’ law firm, this will begin a 90-day process during which you need to rectify the position by either ‘ending’ the appointments or being authorised as an ABS, or the SRA will consider the firm’s authorisation to have fallen away. This can only be resolved by applying to the SRA to be re-approved and leaves the firm without SRA authorisation, and potentially being unable to practice.
Similarly, an ABS law firm which does not have any non-lawyer directors or shareholders for over 90 days will be considered to have lost its authorisation, and must also apply for re-approval.
If you are planning to make any changes to the management and ownership of your firm, you should take care to obtain the correct SRA approvals in advance of making those changes, as this can affect your authorisation.
If you have any concerns, or would like to discuss potential changes to the structure of your law firm, we have a specialist team of former SRA Authorisation employees who can help with the project management of applications for new law firm start-ups, ABS conversions of existing firms, approval applications of new investors, management, and more!
Please get in touch for an initial chat to discuss how we could help your business.