An alternative business structure is a licensed legal business in England and Wales that allows non-lawyers to own, manage or invest in a law firm. Introduced under the Legal Services Act 2007 and licensed by the Solicitors Regulation Authority (SRA) since 2012, the alternative business structure broke a centuries-old rule that only lawyers could own legal practices.
Before this reform, a solicitors’ firm could not take outside investment or share ownership with non-lawyers. A retailer, bank or accountancy firm could not own a law practice, and external investors could not buy a stake in one. The alternative business structure changed all of that, opening the legal market to new capital, new management ideas and new ways of delivering legal services.
This guide explains what an alternative business structure is, how ABS law works in practice, how an ABS differs from a traditional partnership, what is involved in setting one up, the compliance duties that apply, and what the rise of ABS firms means for clients and legal professionals across the UK.
What Is an Alternative Business Structure?
An alternative business structure (ABS) is a firm authorised by an approved regulator to carry out reserved legal activities while being owned or controlled, wholly or partly, by non-lawyers. In England and Wales, the main licensing authority is the SRA, which began authorising alternative business structures in 2012.
The key innovation is simple: within an alternative business structure, lawyers and non-lawyers can work together as owners. A business manager, accountant, investor or large company can hold shares in the firm or sit on its board. The firm can raise external capital rather than relying only on partners’ money, and it can be run with modern corporate management methods.
Reserved legal activities, such as conducting litigation and exercising rights of audience, still require authorisation. An alternative business structure does not remove regulation; it changes who may own and run a regulated firm.
How ABS Law Changed the Legal Services Market
When ABS law took effect, many predicted supermarkets and banks would open high-street legal departments. The reality has been more gradual but still significant. Large organisations set up ABS legal arms, accountancy firms expanded into legal services, and new entrants combined legal advice with other professional services.
ABS law has encouraged competition on price, technology and client service. Fixed fees, online conveyancing platforms and subscription-style legal services have grown, partly because an alternative business structure can attract the investment needed to build them.
For employees and employers, this wider market matters in two ways. Employers buying legal services can compare traditional firms and ABS providers on price, technology and service. Employees, meanwhile, may find themselves working for an ABS-owned business, for example in an insurer’s legal department, with different career structures from a traditional partnership.
Alternative Business Structure vs Traditional Partnership
A traditional solicitors’ partnership is owned and managed by its solicitor partners. Profits are shared among the partners, capital comes from the partners themselves, and every decision-maker is a lawyer. An alternative business structure works differently:
- Ownership: non-lawyers can own shares or hold management roles, including majority or complete ownership.
- Investment: the firm can raise outside capital from investors or a parent company.
- Management: professional managers can run the business while lawyers focus on legal work.
- Structure: many ABS firms use a limited company or LLP vehicle rather than a traditional partnership.
- Profit sharing: profits can go to non-lawyer owners and investors, not only solicitor partners.
Both models remain fully regulated. Clients of an alternative business structure receive the same core protections, including professional indemnity insurance, SRA regulation and access to the Legal Ombudsman.
Non-Lawyer Ownership and Investment in Practice
The most talked-about feature of an alternative business structure is outside ownership. Up to 100 per cent of an ABS can be owned by non-lawyers, which has produced several distinct models across England and Wales.
In-house and group ABSs. Large employers, insurers and membership organisations have set up ABS firms to provide legal services to their customers or members. A bank might offer conveyancing alongside mortgages, while an insurer handles claims litigation through its own ABS.
Professional services ABSs. Accountancy firms and consultancies have used the alternative business structure to add legal services to their existing offering, creating one-stop shops for business clients. For more on how investment and legal frameworks interact, see our guide to law and corporate finance in UK business.
Private-equity-backed ABSs. External investors have funded fast-growing firms, particularly in volume areas such as conveyancing and employment advice. The capital pays for technology, marketing and expansion that a traditional partnership could struggle to finance.
Employee-owned ABSs. Some firms have used the structure to give non-lawyer staff an ownership stake, improving retention and aligning the whole team behind the business.
Setting Up an Alternative Business Structure: SRA Authorisation
Setting up an alternative business structure requires an ABS licence from the SRA. Key steps include:
- Choosing a business vehicle. Most applicants incorporate a limited company or form an LLP before applying. Our company law guide for UK businesses explains the corporate framework behind these vehicles.
- Preparing a business plan. The SRA expects a credible plan showing how the firm will operate, remain financially viable and protect clients.
- Nominating compliance officers. Every ABS must have a Compliance Officer for Legal Practice (COLP) and a Compliance Officer for Finance and Administration (COFA).
- Fit and proper checks. Owners, managers and compliance officers must satisfy the SRA that they are fit and proper, including checks on finances and disciplinary history.
- Demonstrating systems and controls. Applicants must show systems for handling client money, managing conflicts, supervising staff and meeting the SRA Principles.
- Professional indemnity insurance. The firm must arrange qualifying insurance before it begins practising.
Application fees run into thousands of pounds and the process can take several months. Specialist advice is strongly recommended before applying.
Compliance Essentials: COLP, COFA and Ongoing Duties
Once licensed, an alternative business structure faces the same core regulatory duties as any SRA-regulated firm, plus extra attention to the risks of non-lawyer ownership.
The COLP (Compliance Officer for Legal Practice) takes responsibility for the firm’s compliance with the SRA’s regulatory arrangements and must report serious breaches. The COFA (Compliance Officer for Finance and Administration) oversees compliance with the SRA Accounts Rules and also has reporting duties.
Day-to-day compliance for an alternative business structure includes upholding the SRA Principles, keeping client money separate under the Accounts Rules, managing conflicts of interest (especially where owners have other business interests), supervising staff, cooperating openly with the SRA and reporting material breaches.
Because investors and parent companies may have commercial priorities, the SRA pays close attention to whether an alternative business structure protects lawyers’ professional independence. Governance documents should make clear that regulatory duties override commercial instructions where they conflict.
Alternative Business Structures vs MDPs, LLPs and Other Models
An alternative business structure is not the only way to organise a modern legal practice. The main alternatives compare as follows:
- Multi-disciplinary practices (MDPs). An MDP combines lawyers with other professionals, but control stays with the lawyers and outside investment is not allowed. An ABS goes further by permitting non-lawyer ownership and external capital.
- Limited liability partnerships (LLPs). Many solicitors’ firms are LLPs, but a standard solicitor LLP must still be lawyer-owned. An LLP can, however, be licensed as an alternative business structure, combining limited liability with non-lawyer ownership.
- Limited companies. A solicitor-owned limited company needs no ABS licence, but the moment non-lawyers take ownership or management roles in a firm doing reserved legal activities, an ABS licence is required.
- Sole practice. A single solicitor practising alone cannot take outside investment or share ownership with non-lawyers without becoming an ABS.
A firm that wants external capital, non-lawyer partners or corporate group ownership will usually need the alternative business structure route.
What ABS Means for Clients
For clients, alternative business structures have widened choice. Businesses and individuals can now buy legal services from multi-service providers, specialist online firms and traditional partnerships competing harder on price and service.
Potential benefits include clearer pricing, with more fixed fees and published prices, and innovation, as invested capital funds better technology and client portals. Protections remain in place: clients of an ABS can complain to the Legal Ombudsman, benefit from professional indemnity insurance and, where eligible, the SRA Compensation Fund. Before instructing any firm, check the SRA register to confirm it is authorised. Businesses reviewing their legal arrangements may also find our commercial law guide for UK businesses useful.
What ABS Means for Legal Professionals
For solicitors, the alternative business structure has created new career paths. Lawyers can become employees or directors of businesses owned by non-lawyers, take salaried roles in corporate legal departments structured as ABSs, or partner with accountants and other professionals in jointly owned firms.
Non-lawyers have gained routes into legal business ownership and management that did not exist before. Compliance, finance, marketing and technology professionals can hold senior leadership roles and equity in an ABS. Staff moving from a partnership to an ABS-owned company may find different contractual terms and bonus structures, so reviewing the employment contract is wise. Our UK law career guide explores the roles available across the modern legal sector.
Risks and Criticisms
The model is not without critics. Concerns include pressure on lawyers’ independence when owners prioritise profit, conflicts of interest where a parent company’s commercial interests clash with a client’s, and the cost and complexity of ABS licensing. The SRA can impose licence conditions or intervene where standards slip.
How to Check Whether a Firm Is an ABS
For clients and employers choosing legal advisers, it is worth knowing whether a firm is an alternative business structure. Most ABS firms state their status on their website, often in the footer or regulatory information page, and the SRA register shows which firms hold an ABS licence.
When comparing providers, ask who owns the firm, how it is funded and how it safeguards lawyers’ independence. An alternative business structure that answers these questions openly is usually one that takes its regulatory duties seriously.
Employers instructing firms for employment disputes, contracts or tribunal work should apply the same checks: confirm SRA authorisation, review the firm’s complaints procedure and make sure fee arrangements are clear in writing before work begins.
Frequently Asked Questions
Can a non-lawyer fully own a law firm in the UK?
Yes, in England and Wales a non-lawyer can own 100 per cent of a law firm, provided the firm is licensed as an alternative business structure by the SRA or another approved regulator and meets all regulatory requirements.
Does an alternative business structure still follow solicitors’ regulation?
Yes. An SRA-authorised ABS must comply with the SRA Principles, Codes of Conduct and Accounts Rules, maintain professional indemnity insurance and appoint a COLP and COFA.
How much does an ABS licence cost?
Fees depend on the size and complexity of the business, but applicants should budget several thousand pounds for the SRA application fee alone, plus the cost of professional advice, insurance and setting up compliance systems.
Are ABS firms safe for consumers?
Clients of SRA-authorised alternative business structures have the same core protections as clients of traditional firms, including access to the Legal Ombudsman and professional indemnity insurance. Always check the SRA register before instructing a firm.
Conclusion
The alternative business structure has reshaped legal services in England and Wales by allowing non-lawyer ownership and outside investment in law firms. For founders and investors, it offers a route to build modern, well-funded legal businesses. For clients, it has brought more choice, clearer pricing and new ways to access advice. For lawyers and legal professionals, it has opened up fresh career paths beyond the traditional partnership.
At the same time, an alternative business structure remains a fully regulated entity. SRA authorisation, the COLP and COFA roles, and strict compliance duties mean innovation must sit alongside professional standards. Anyone considering setting up or joining an ABS should take specialist advice and understand the regulatory commitment involved.
