Regulatory Reform Details Announced

The Solicitors Regulation Authority (SRA) have announced their planned package of regulatory reforms which, they claim, are designed to provide solicitors and law firms with greater flexibility over how they operate, making legal services more accessible to the public.

Developed over a four-year period, and following four major public consultations, the reforms are underpinned by what the SRA have described as a simpler and easier-to-understand set of Principles, Codes and rules for solicitors and law firms. At 130 pages (more than 300 pages shorter than the existing Handbook) only time will tell whether brevity does equal simplicity or merely lack of clarity.

Focussing on high professional standards, the SRA claim that the new rule book will get rid of unnecessary and complex rules which constrain law firms and drive cost rather than consumer protection.

Amongst the changes, which are being introduced on a phased basis from 2019 onwards, are:

• Creating separate Codes of Conduct for firms and solicitors and simple Account Rules that focus on keeping client money safe.
• Freeing up solicitors to carry out ‘non-reserved’ legal work working within a business not regulated by a legal services regulator. Such solicitors would be bound by our Code, as are all solicitors regardless of where they work, would not be able to hold client money and would not be required to have indemnity insurance. They must also make clear to the users of their services exactly what protections are in place, including not providing access to the SRA Compensation Fund.
• Allowing solicitors to provide reserved legal services on a freelance basis. Freelancers would not be able to hold client money or employ staff and must have appropriate indemnity insurance. They must also explain to clients what regulatory protections apply.
• Introducing a new enforcement strategy, providing greater clarity on when and how we would take action against a firm or solicitor.

The SRA are also publishing a series of Better Information reforms, which they believe will improve the public’s access to legal services by making information on law firms’ prices, protections and services more readily available. These are due to be introduced from December 2018 onwards.

Other changes to the SRA’s original proposals, include:

• Retaining and clarifying rules requiring solicitors running a firm – or going freelance – to have at least three years’ experience;
• Dropping proposals to publish data about client complaints to firms, because of the need for contextual information; and
• Amending plans around definitions of client money, so that the vast majority of firms can continue to operate as they do now, avoiding unnecessary costs.

The regulatory reforms are to be submitted to the Legal Services Board for formal approval.

Further information is available on the SRA website.

Looking to the Future

Better Information consultation