Dear Members
You will no doubt have already received the below or read about the proposals in the Law Society Gazette. The proposed changes are extremely scary for us as qualified Solicitors.
I have just had a conference call with Joe Egan, vice president of the Law Society to discuss the huge changes proposed. In Summary the SRA propose changes as follows:-
The creation of a ‘two tier’ market
- The proposals could result in two tiers of solicitors – those working in a regulated entity and those who are not – with different rules and protections applying to clients, depending on where the solicitor is working.
- Legal Professional Privilege
- Advice from solicitors in unregulated entities may not be legally privileged. If part of the solicitor profession is unable to give legally privileged advice, this is a slippery slope which could erode the concept of LPP, a cornerstone of the justice system and a key right of clients. This could also undermine the standing of the solicitor profession both at home and abroad.
- Professional Indemnity Insurance / Compensation Fund
- Solicitors working in unregulated entities may not be required to have professional indemnity insurance. Their clients may also not have access to the compensation fund or access to the Legal Ombudsman if things go wrong. This risks eroding a key element of current client protection.
- Supervision
Changes to supervision requirements would mean that newly qualified solicitors with no experience would be able to set up their own unregulated firms. Newly qualified solicitors generally welcome the support and guidance from more experienced solicitors and this is also a key driver of quality of service. If that’s not available it could place clients as well as newly qualified solicitors at risk, and negatively impact on the standing of the solicitor profession.
- Conflicts / Confidentiality
- Unregulated organisations will not be subject to the SRA rules of conflict and confidentiality although individual solicitors in those organisations will. This means that unregulated entities will be able to act in situations where regulated entities would not. It also creates complexity for individual solicitors in unregulated entities who will have to comply with the SRA rules on conflicts and confidentiality, and leaves regulated firms at a disadvantage. Significantly, it also removes protections for clients in unregulated entities which are deemed important for regulated firms to comply with.
- Accounts rules
- The SRA proposes to change the definition of client money to allow money paid for all fees and disbursements for which the solicitor is liable to be treated as the firm’s money. In parallel,the SRA proposes to simplify the accounts rules which might create uncertainty as to whether a firm is compliant. Finally, the SRA is proposing to allow solicitors to use third party managed accounts.
- Enforcement
- If the proposals are accepted, the SRA handbook will be shorter. Although this could be superficially attractive, many solicitors prefer a clear set of “dos” and “don’ts”, as compliance with such is arguably clearer. It is not clear from the consultation how the system of enforcement will work under the new codes – we are concerned that this lack of clarity creates ambiguity.
As you can see the proposals are huge and I would therefore urge you to respond to the SRA’s consultation, which you can access here.
The deadline is 21 September. The response should take you no longer than 10 minutes to complete. If you don’t have 10 minutes to spare, a simple email to consultation@sra.org.uk stating your views will still count as a response. If you email, you need to ensure the subject is labelled ‘SRA Looking to the Future’. Catchy title I know.
Many thanks
Rebecca Ladell
President of Westmorland Law Society
Recent Comments