Paralegal Law Firms

i.e. legal service providers run by non-lawyers.

Paralegal law firms exist in various guises: advice centres; consumer agencies; claims companies managing injury, employment and other claims; specialist advisors in discrete areas such as immigration, divorce, debt, housing. We distinguish them from charities and law centres which are often managed or supervised by qualified laywers. We are referring mainly to private, commercial businesses that, like traditional law firms, aim to make a profit from providing legal advice, representation and related services.

There are approximately 6,000 paralegal law firms in the UK. These have developed over the past 10 years. In comparison, it has taken 400 years for there to be the current 10,100 solicitors firms. At this rate of growth it appears that paralegal law firms will outnumber traditional solicitors firms within the next 10 years. At present, this growth has gone largely unrecognised and unregulated. How long that will be allowed to continue is one of the big questions that will shape the future of legal services.

Paralegals are largely unregulated which means that there is very little to stop anyone setting up their own paralegal law firm. You do not need, for example, a licence as you do in many countries. However, there are some areas where paralegals are required to register and in other cases there are practical impediments to setting up your own business.

The fundamental principle is that you are not entitled as of right to conduct litigation (i.e. start or defend court proceedings) or have rights of audience (i.e. the right to speak on behalf of a client in court). You can, though, ask the court's permission because the court has  descretion to allow you to but it will make its decision based on the facts and circumstances in each case.

The registration requirements mean that there are currently three main types of paralegal law firms

1. Paralegal law firms regulated by the Office of the Immigration Services Commissioner

If you wish to do immigration-related work, then you almost certainly have to first register with the Office of the Immigrations Services Commissioner and fulfil her requirements (see http://www.oisc.gov.uk/how_to_become_an_immigration_adviser/)

2. Paralegal law firms regulated by the Ministry of Justice

If you wish to do most legally-related work in connection with claims involving: personal injury; work-related injury, disease or disability; criminal injuries compensation; Industrial Injuries Disablement Benefit; employment; housing disrepair or financial products and services, then you first need to be registered with the Ministry of Justice under the Compensation Act 2006. The Act was meant to regulate claims management companies, but was drafted so widely that it catches paralegal law firms too. If you are considering providing these kinds of services, visit the Ministry of Justice Authorisation page ( https://www.claimsregulation.gov.uk/authorisation.aspx) to find out more about who needs to be authorised and how you can apply. Regulated providers are required to comply with conduct rules which are explained on the Ministry of Justice Conduct of Business page (https://www.claimsregulation.gov.uk/conduct.aspx).

3. Unregistered paralegal law firms

Everyone else can do whatever they want provided that they do not undertake "reserved activity" work.

Reserved activity work used to be the monopoly of solicitors and/or barristers. It is still regulated work and it is an offence to do it unless one is regulated, but in some cases "regulated" now includes some of the other six classes of lawyers recognised under the Legal Services Act 2007.

Broadly speaking reserved activity work covers:

See Schedule 2 of the Legal Services Act 2007 for more detailed definitions.

Subject to the points above anyone can in theory set up in business and give legal advice and assistance. For example, you might want to do divorce work but you would not be entitled to start or dispute divorce proceedings on behalf of your client as that would count as conducting litigation.  You could however advise and assist someone who was acting in person. Further, simply knowing the procedural steps involved in a divorce case falls far short of the skills and knowledge you would need to run a successful family law practice.  You need to have a detailed understanding of divorce law and at least a basic understanding of tax law; of childcare law; of contract law and trust and property law.

There is a further complication relating to criminal work in that it is almost entirely funded by legal aid (i.e. people needing a defence lawyer have the cost met by the legal aid scheme) and you would not be eligible to obtain a legal aid contract.

You also need to be aware of one very important point: all legal practitioners, including paralegals, tend to be held to very high standards by the courts, trading standards departments etc.  They are very opposed to “training on the job” where that training is not closely monitored every stage by a qualified supervisor.  In other words, as a sole practitioner you will be expected to get it 100% right, 100% of the time from day one/client 1 and no credit will be given for the fact that you are at the beginning of your career. Indeed, if you start your own business without first being demonstrably competent in the areas you intend to practice in then that will count against you if there is a problem.

And if there is a problem you may well find that your client claims that it is your fault and you may face a lawsuit of your own. For this reason it is very important that you obtain professional indemnity insurance to cover. Solicitors must have this under their regulations and we require our member firms to have it too. It doesn't only protect your clients, it also protects you. A client's losses when a professional advisor makes a mistake can be very high and so damages in professional negligence cases can be very high as well. If you do not have insurance, you will find that those losses become your personal losses.

There are many successful paralegal law firms doing an excellent job and providing a very valuable service. They are run and staffed by very experienced, higly professional people and we do not advise anyone to set up a firm until they are of the same calibre.


 

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