SRA announces detail of regulatory reforms
The Solicitors Regulation Authority (SRA) has published further details of the reforms which it plans to introduce over the coming 12 to 18 months. Designed to provide solicitors and law firms with greater flexibility over how they operate they will, it is hoped, make legal services more accessible to the public.
At the heart of the reforms is a simpler and (allegedly) easier-to-understand set of Principles, Codes and rules for solicitors and law firms. At 130 pages (as opposed to the current 400+ pages) it is certainly shorter than the existing Handbook. The claim is that by focussing on high professional standards, the SRA will be able to get rid of unnecessary and complex rules which constrain law firms and drive cost rather than consumer protection. Clearly the success of that approach remains to be seen and certainly many smaller firms seem to prefer the prescriptive approach rather than the more laissez-faire approach currently advocated.
The changes that are being introduced will be phased in from 2019 onwards and will include:
- Creating separate Codes of Conduct for firms and solicitors and simple Accounts 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 the SA Code, would not be able to hold client money and would not be required to have indemnity insurance. Solicitors operating in this way would also have to make it 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 which would apparently contain greater clarity as to when and how the SRA would take action against a firm or solicitor.
In addition, the SRA have also announced a number of “Better Information” reforms which, they state, are designed to improve the public’s access to legal services by making information on law firms’ prices, protections and services more readily available and are looking at:
- 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.
- 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 will be submitted to the Legal Services Board for formal approval over the coming months.