This is a call we receive very regularly into our company. At the time of writing it is not possible for a non-solicitor to have ownership of an SRA regulated solicitors’ firm set up in the conventional manner – whether as a partnership, limited company or sole practitioner. This is quite a simple message – and one that I have to then spend a lot of time explaining to non-solicitors, some of whom think that owning a solicitors’ firm is as straightforward as buying any other business.
However.. there is of course a way of selling a law firm to a non-solicitor buyer and that is with the use of an ABS (Alternative Business Structure).
An ABS is either a) an entity that consists of so much regulation to create it blows the mind of most people looking at them or b) a new model of law firm set up some time ago to enable non-lawyers to make money out of law firms. The use of the ABS model over the last 10 years has opened the legal market up to larger businesses and individual investors to take ownership in law firms.
There are discussions within the profession about how ABS firms seem to be able to get away with a lot of things that solicitors firms are unable to. We have had reports from consultants who have worked with both structures to say that anecdotally ABS firms can at times be a lot more loose with regulatory compliance (they don’t always appreciate how careful they should really be) compared with solicitors firms who are only too aware of how the SRA can
make life intolerable for them if they step out of line.
However the ABS also creates the benefit of a law firm seller being able to sell their practice to a much wide audience than just other solicitors.
How does an ABS assist with a law firm sale?
Very simple – you agree to sell your firm to a non-solicitor buyer, but before the sale completes an application is made to convert the firm into an alternative business structure (ABS). The sellers remain in situ whilst the conversion takes place. Small law firms can be picked up for relatively low amounts and this type of arrangement benefits the buyer by providing them with an existing structure in place including professional indemnity insurance, clients, a website and a presence. The buyer will of course need to find their own solicitors to run & manage the firm, which is no easy task.
For a confidential discussion about your firm and a rough valuation, please give me (Jonathan Fagan) a ring on 01824780937. You can visit our specialist law firm sale site here – www.jonathanfagan.co.uk
In case it assists – here is a link to our online guide to selling a law firm.
https://ten-percent.co.uk/how-to-sell-a-small-medium-sized-law-firm-by-jonathan-fagan-ten-percent-legal/
