Introduction

In an attempt to reach out to small firms in England and Wales the Solicitors Regulation Authority (SRA) has launched a new small firm initiative, backed up by a new section of its web site and a range of resources which, it says, will help small firms with the regulatory problems they encounter.

The proposals that have now been put forward by the SRA follow on, they claim, from the reforms that they launched in May of this year.

The SRA has frequently been accused of being out of touch with the needs of small firms (an accusation often levelled at the Law Society too).  This is not a surprising accusation given that increasingly SRA managers are being drawn from outside of the solicitors’ profession, and given that the SRA Board is drawn entirely from either lay people or those with no experience of working in a small practice.

Considering that sole practitioners and small firms comprise a significant proportion of the total number of firms, this could be seen to be something of a weakness on the part of the SRA.

To “redress” the obvious imbalance in experience, the SRA have been consulting with the Sole Practitioners Group (SPG) and have, following on from this, produced a discussion paper as to their proposals for regulating small firms.

The paper says, as if it were some new found truth, that ‘The reality is that small firms are an essential and valuable part of the regulated community in providing legal services to a wide range of consumers’. An admission that is possibly better late than never.

The New Initiatives

The extent to which the new initiatives will assist smaller practices is debateable, although in fairness to the SRA they are trying to engage in a dialogue with smaller practices to find out what they want in terms of regulatory help.

The most obvious of the new initiatives is the creation of a dedicated small firms section of the SRA website which, the SRA state, will include news and links to guidance.  It is intended that the content will reflect the needs of the differing groups comprised within the term “small practices” and will include features such as:

• Links to e-newsletters
• A regulatory starter pack
• A pack to help firms who are closing down
• Webinars on topics of regulated interest, and
• Forums, or “virtual reference groups” as the SRA describe them, in which practitioners can assist with the SRA’s approach to small firms.

There will be a dedicated small firms service offered as part of the Professional Ethics Helpline. Those ringing the helpline will be given the opportunity of being put through to an adviser with specialist knowledge of the regulatory issues affecting small firms.

From the perspective of supervision, the aim will be to deal with regulatory matters more quickly.  Rather than having one-to-one interaction, as happened with the larger firms, the approach will be to provide more advice when it is needed and to have a swifter resolution of those issues which do arise.

One of the proposed changes which small firms are likely to appreciate more than others, however, is that in relation to authorisation, and in particular a new system of “deemed approval” of compliance officers in firms which are either sole practitioner practices or where the COLP/COFA is a lawyer/manager of a two to four manager recognised body.  Here, the intention is that firms would simply notify the SRFA using mySRA of any appointments – rather than having to undergo a separate application and approval process.

A further proposal in relation to authorisation is in connection with the authorisation of new firms following a change of constitution where there will now be a target turnaround of 30 days for applications.

Amongst other proposals are:

• Introduction of lifetime authorisation for sole practitioners;
• The appointment of a Small Business Appeals Champion to scrutinise and report on the effectiveness of the SRA’s processes;
• Ways of making PII requirements more proportionate;
• A review of the SRA Handbook to make it simpler and easier to use; and
• On going reviews and surveys of small firms.

Engagement

Firms who wish to engage with the SRA should go to the discussion paper on the Small Firms section of the SRA web site (www.sra.org.uk/sra/consultations/discussion-papers/small-firms.page). The discussion period ends on 4 February 2015