Proposed changes to the SRA Handbook: Current SRA Consultations
On 27th September, the SRA launched its second consultation paper on reform of the Solicitors Handbook. Phase One, which began in June 2016, involved a shortening of the Code of Conduct and Accounts Rules and proposals to allow practising solicitors to deliver unreserved services to the public from non-regulated organisations.
Looking to the future SRA Consultation: The Uberisation of the Legal Market?
Phase Two focuses on authorisation and enforcement, with proposals to reduce the Handbook by more than two-thirds giving "firms more flexibility in the way they manage their business and choose to practise". In what the SRA has described as the "uberistation" of the legal market, this year's proposals go further than last year's, which envisaged that the existing structure of solicitors working through law firms and sole practices would be retained. Instead, these new proposals recommend an easing of restrictions, subject to certain conditions, which would allow self-employed solicitors to provide reserved legal services to the public on a freelance basis, adopting a similar Chambers-style arrangement to barristers. The solicitor would need to be practising as an individual (and therefore without any employees or partners and not through a service company), maintain appropriate professional indemnity insurance and would not be able to hold client money, except in respect of fees and disbursements.
Other key proposals include:
• Widening the current practising address requirements, which the SRA consider unnecessarily restrict the development of either on-line or cross-border services, such that firms can be based anywhere in the UK, not just in England and Wales.
• Removing the rule that requires solicitors to have three years of practising certificates to set up a regulated law firm.
• Corporate owners and managers of firms, which do not themselves provide legal services to the public (but provide them through an authorised firm) will no longer require SRA authorisation. They may also not be eligible for authorisation, even if they applied for it. The SRA does not intend to prevent corporate owner structures, but this would mean the underlying authorised firm would have non-authorised owners or managers and would therefore need to register as an alternative business structure (ABS). It is unclear whether this would apply retrospectively.
• Streamlining character and suitability requirements; the onus will remain on the individual to provide evidence to support their application for assessment of their character and suitability.
• Dispensing with the requirement to re-approve partners of firms, and other Legal Services Act regulated professionals when they become a manager or owner of a new body, or their existing body changes constitution e.g. moving from a partnership to a limited company.
• Transitional arrangement for the introduction of the Solicitors Qualifying Examination (SQE), which is set to be introduced in autumn 2020. All those starting out from 2020 must take the SQE, but anyone who has started the process of qualification through current routes will have until 2031 to qualify this way.
• Revised Enforcement Strategy - moving from a prescriptive approach towards a principle-based more flexible approach to enforcement, with a new set of Disciplinary Rules which whilst broader in scope, do not create new powers or sanctions but instead provide an explanation on how regulatory enforcement tools will be applied to assessment and regulation of all complaints. Greater account will be taken when considering actions of intent, harm caused, patterns of behavior, vulnerability of the client, seniority of the solicitor, and any remedial action taken. The proposed strategy contains case studies and a new “sanctions and controls” table to guide solicitors and firms.
A copy of the Consultation can be viewed here.
'Looking to the future' SRA Consultation: Better information, more choice Price Comparison
A second SRA consultation, also published on the 27th September (and following on from the the Competition and Markets Authority's study into legal services), proposes plans for law firms to publish price lists on their websites, along with descriptions of the services included in that price, in a number of specific areas. These include private client work (drafting of wills, probate / estate administration and drafting lasting powers of attorney); family work (both undefended divorces and financial disputes arising out of a divorce ); residential conveyancing (limited to sale, purchase and remortgage); motoring offences; personal injury claimant work; employment tribunals . For small businesses, firms would have to publish their prices for employment tribunal and debt recovery work, along with licensing applications in relation to business premises.
The SRA aims to "improve the amount of meaningful information available to consumers, to create a more competitive market", which it says will not only benefit the public directly, but also indirectly by making it available to data re-publishers, such as comparison websites. It has warned against any law firms offering “bait pricing”, or offering unrealistically low prices which were never available in practice, which could breach the rules on price transparency as well as new Code of Conduct rules on providing accurate publicity.
Other proposals include:
• Building a digital register of firms and individuals the SRA regulates together in one place and making this available to the public.
• Publishing data on client's first-tier complaints made against law firms and their areas of practice in a new dedicated register.
• Requiring firms to make information on the SRA's regulatory protections available – this includes the use of an SRA logo and digital badge, which will help fully regulated firms to benchmark themselves against other legal providers in the market.
• To require solicitors working in non-Legal Services Act regulated firms to inform clients that they are not subject to the SRA requirements for compulsory professional indemnity insurance and hence the clients would be unable to make a claim on the Compensation Fund.
The Law Society has been particularly vocal in its critiscism of these plans, saying it was 'counter-intuitive' to force regulated entities to publish data while leaving unregulated bodies free to ignore the requirement. They do not think the proposals will result in the changes to consumers’ behavior the SRA is looking for, and they can see a number of challenges and risks for smaller firms. For example, there is a risk that complaints information damages the reputation of smaller firm's more than larger firms.
A copy of the Consultation can be viewed here
Both SRA Consultations will run until 20 December 2017
For more information, please contact Philippa Varcoe on + 44 20 7743 7317 or Philippa.Varcoe@dwf.law
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.