THE ABILITY TO CREATE true multi-disciplinary practices, from last October under the Legal Services Act, passed with more of a whimper than a bang – at least as far as accountancy firms were concerned.
Perhaps it was the less-than-satisfying experiences of big firms’ attempts to create MDPs in the early noughties – which by and large failed – that has put off the creation of professional firms comprising lawyers and accountants in ‘partnership’.
The problem? Too many conflict of interest issues with their clients. But there will be firms for whom an MDP structure could work.
On that basis, and in the spirit of progress, the ICAEW is diligently working towards applying for ‘approved regulator’ status.
The application will be made to the Legal Services Board, in tandem with applying to license firms that want to undertake probate work.
Firms that gain a probate licence can then apply to become an MDP (technically known as an alternative business structure or ABS).
MDPs can receive one of two permits. ‘Authorised firms’ would most likely apply to sole practitioners and small high-street practices, according to the ICAEW regulatory policy manager Claire Phillips. This licence encompasses the whole firm.
Secondly, ‘licensed firms’ will only need to contain one staff member that undertakes probate work.
The key gain of attaining MDP status is that firms with either of the two permits can then appoint professionals to provide general legal services.
Applying for probate and MDP status could take up to nine months in worst case scenarios, although the ICAEW has hinted that it would look to grant licenses more speedily than that.
However, any firms thinking of picking up the phone to the institute for a probate and MDP application will need to be patient.
The institute’s own application to become a regulator could take 12 months. The ICAEW is working behind the scenes to make sure that its application will go as smoothly as possible. The coming weeks will see a public consultation document issued by the institute prior to a formal submission made for regulator status to the Legal Services Board (LSB).
The LSB then passes the application onto the OFT and Legal Services Consumer Panel to review and comment. The Lord Chief Justice also takes part in the review process. When their comments are collated, the ICAEW can respond to their queries – the LSB then makes its recommendation.
Last but not least, the Lord Chancellor receives the recommendation and a statutory order for a debate in parliament on the application made.
If the ICAEW clears those numerous hurdles, it will gain regulator status. But what then?
The key questions for professionals working within MDPs will be: who is regulating us, and how can we avoid falling foul of rules set by bodies of which we’re not even members?
Solicitors working within an MDP licensed under the ICAEW will still need to comply with the Solicitor’s’ Handbook – but where the rules conflict, the ICAEW’s code ‘trumps’ the handbook, explains Phillips.
Suffice to say, professional regulators are trying to make sure such confusing situations don’t arise.
The institute is working alongside 12 other bodies on a framework to “share best practice and avoid regulatory overlaps”, says Phillips.
“It’s about coordination and cooperation,” she adds.
So months of process and form-filling loom – for both the institute and its members. But the ability to offer clients with a broad range of services will surely prove so attractive that firms will grab the opportunity.
The institute is being forward-thinking – how many of its firms will follow suit?
Image credit: Shutterstock
The restaurant chain Bar Soba is planning expansion after a £3m Business Growth Fund (BGF) investment
Companies must report on their complex financial structures including offshore accounts and notify HMRC
Paul Boyle is appointed as the president of the Chartered Institute of Internal Auditors
More than 5,000 restaurant companies are at risk of insolvency as Brexit raises costs