Admitting a non-lawyer member to a law firm LLP makes it a licensable body (LSA 2007 s.72)
Hollins Quarrie LLP is an SRA-authorised firm in England whose members are all solicitors. The members want to admit Priya Raman, a chartered accountant who is not an authorised person under the Legal Services Act 2007, as a member of the LLP with a 5% share of the profits and voting rights, so that she can run the firm's finances. The firm will continue to carry on reserved legal activities.
What is the regulatory consequence of admitting Priya as a member of the LLP?
Choose one answer to see the reasoning.
Worked answer
Correct answer A: The LLP becomes a licensable body and must obtain an alternative business structure licence from a licensing authority, such as the SRA, to continue its reserved legal activities.
THE RULE TO REMEMBER
A body with a non-authorised person as a manager, or holding an interest, is a licensable body and needs a licence (ABS) from a licensing authority to carry on reserved legal activities (LSA 2007 s.72).
Admitting a non-lawyer member to a law firm LLP makes it a licensable body (LSA 2007 s.72)
Under s.72(1) Legal Services Act 2007, a body is a licensable body if a non-authorised person is a manager of it or has an interest in it. The members of an LLP are its managers, and Priya, an accountant, is not an authorised person. Once she becomes a member, Hollins Quarrie LLP is therefore a licensable body, whatever the size of her stake. Section 18(2) provides that a licensable body cannot be authorised to carry on reserved legal activities other than by a licence under Part 5 (an alternative business structure) from a licensing authority, such as the SRA; s.18(3) gives only a 90-day period of deemed continuing authorisation. The firm should therefore obtain an ABS licence. The 10% figure in s.72(2) concerns indirect ownership through another body, not a non-authorised individual who is a manager.
Why B is wrong: The 10% threshold in s.72(2) applies to a body that is itself a manager or owner; a non-authorised individual manager makes the body licensable under s.72(1) regardless of stake.
Why C is wrong: Appointing her as COFA does not stop her being a non-authorised manager; the firm still becomes a licensable body.
Why D is wrong: The Act does not ban non-lawyer managers; it permits them through licensing as an alternative business structure.
Why E is wrong: The Legal Services Board oversees approved regulators; it does not license or directly supervise individual firms.
A little more practice done.
Related questions
Which activities are reserved legal activities? Probate activities v will-writing (Legal Services Act 2007 s.12 and Sch 2)
Which of the following best identifies the service that is a reserved legal activity under the Legal Services Act 2007?
Reserved instrument activities: Land Registry transfer v wills and powers of attorney (LSA Sch 2)
Which document can Gareth's business NOT lawfully prepare for a fee, because preparing it is a reserved legal activity?
Rights of audience: a litigant in person and a lay friend (Legal Services Act 2007)
Which of the following best describes the rights of audience at the trial?
A GOOD HABIT, DELIVERED
Tomorrow's question.
In your inbox.
One free question a day, with the answer and reasoning.
No course pitches. Just your daily practice.