Practice Structures

Introduction

There are a number of structures through which it is possible to practise as a solicitor, and a number of alternatives also for those solicitors who wish to practise in such a way as to avoid the full impact of regulation by the SRA. This section looks in outline at those structures which apply to practise from an office in England and Wales. You should note that different factors apply to practise from an office outside England and Wales and practise as a registered foreign lawyer which are not dealt with in this section.

If you are planning to set up in practice using one of these structures, or being already in practice are planning to change the structure through which you practise, then please contact Lawyers Defence Group and we will be happy to provide you with more tailored and specific advice.

The types of practice

Rule 12 (Framework of practice) of the Solicitors’ Code of Conduct 2007 (as amended) (”the Code”) sets out types of business through which solicitors, RELs, RFLs and recognised bodies may practise.

Essentially there are five main ways in which you can practise as a solicitor in England and Wales. They are:

• as a recognised sole practitioner or the employee of a recognised sole practitioner;
• as a solicitor exempted under 20.03(2) (see below) from the obligation to be a recognised sole practitioner;
• as a manager, employee, member or owner of:
  1. a recognised body; or
  2. a body corporate which is a manager, member or owner of a recognised body;
• as a manager, employee, member or owner of:
  1. an authorised non-SRA firm; or
  2. a body corporate which is a manager, member or owner of an authorised non-SRA firm,

  provided that all work you do is either of a sort authorised by the firm’s approved regulator, or done for the firm itself, or within 13.02 (Work colleagues), 13.03 (Related bodies) or 13.04 (Pro bono work);

• as the employee of another person, business or organisation, provided that you undertake work only for your employer, or as permitted by rule 13 (In-house practice, etc.).

Practise as a recognised sole practitioner

If a solicitor wishes to practise on their own account then, in the light of the changes to the Code following the Legal Services Act 2007, that solicitor must be authorised to practise as a recognised sole practitioner by means of an endorsement to that effect, by the SRA, on their practising certificate. That authorisation must be obtained prior to setting up in practice as a recognised sole practitioner and, if you are already a sole practitioner who was passported through to recognition when the new rules came into effect, must apply to renew that authorisation.

Practise as an exempted recognised sole practitioner

A solicitor will be able to be exempted from the obligation to be a recognised sole practitioner under 20.03(2) and thus not deemed to be practising as a sole practitioner for the purpose of rule 20.03(1) and section 1B of the Solicitors Act 1974 if:

• their practice is conducted entirely from an office or offices outside England and Wales;
• their practice consists entirely of work as a temporary or permanent employee and any firm which employs them takes full responsibility for them as an employee; or
• their practice consists entirely of:
  • providing professional services without remuneration for friends, relatives, companies wholly owned by you or your family, or registered charities;
  • administering oaths and statutory declarations; and/or
  • activities which could constitute practice but are done in the course of discharging the functions of any of the offices or appointments listed in paragraph (b) of the definition of “Private Practice” in rule 3.1 of the Solicitors’ Indemnity Insurance Rules.

Practice as a manager, employee, member or owner of recognised body

For the purposes of rule 12, all other forms of practice are known as recognised bodies. Notes 7 – 12 of rule 12 deal with the position. In essence, however, practice as a partnership, limited liability partnership or a limited company would be regarded as practice as a recognised body. A solicitor can be a manager, employee, member or owner of a recognised body. A manager would include a partner in a partnership, a member of an LLP or a director of a company. An employee is self explanatory. Members and owners are those solicitors who own, or hold, a share in a company but are not themselves directors.

It should be noted, however, that not all of the managers of a recognised body need to be solicitors provided that it is at least 75% controlled by solicitors. Thus in a partnership comprising four people, one of them could be a non-solicitor manager. Note however that a non-solicitor manager must be authorised by the SRA.

A further point to bear in mind is that with the introduction of the Legal Services Act, not all managers need to be solicitors, provided that they are authorised by another approved regulator, for example the Bar Standards Board, ILEX Professional Standards or the Council of Licensed Conveyancers. See elsewhere in relation to Legal Disciplinary Practices.

However, you must ensure that non-lawyer managers and non-solicitor lawyers are not held out as lawyers and only undertake work of the type which their own regulator permits them to undertake.

Alternative Business Structures

Just a brief word about alternative business structures (ABSs).

Currently, ABSs are not permitted but it is highly likely that they will be by about 2012. An ABS could be:

• a firm in which more than 25 per cent of the managers were non-lawyers
• a firm which has been taken over by a non-lawyer enterprise
• a firm which is a company and which has been floated on the stock exchange, or
• a firm which provides both solicitor services and non-legal services (i.e. a multi-disciplinary practice).

Many firms are preparing for the introduction of ABSs – either because they wish to avail themselves of the relaxation in the rules or because they fear that their work may be at risk from commercial organisations offering legal services or from larger, better funded law firms who have gone down the ABS route.

Contact Lawyers Defence Group

If you have a problem concerning the structure of your practice or planned practice or you wish to consider the options for changing the type of structure through which you practice, then you should contact the Lawyers Defence Group.

For further information, or to contact the Lawyers Defence Group about a problem which you have:

• phone on 07092 981 984
• email on help@lawyersdefencegroup.org.uk
• if you are a registered user, request a callback using the form in the right hand menu and someone will call you back at a pre-arranged time
• write to Lawyers Defence Group, Richard Nelson Solicitors, 8 The Courtyard, 707 Warwick Road, Solihull, West Midlands, B91 1TT