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Monday 11 March 2019

The new SRA Code - a lingering concern!



According to a report posted in today’s Legal Futures, Solicitors in smaller firms are more concerned about the imminent, new SRA Code of Practice than they are about Brexit.  Mind you, boredom might have a role to play there! It seems that a major concern is staff retention in a relaxed legal services market –


This brings me to an issue that, for me, has a major concern since the changes were first proposed. 

Under the present regulations a Solicitor can only provide legal services to the public via an organisation regulated by the SRA or other approved regulator. Some legal work is ‘reserved’ and some is ‘unreserved’. Reserved work can only be carried out by an authorised person such as a Solicitor. This is a surprisingly limited category of work and includes the power to conduct litigation, to appear before certain courts and the drawing up of certain documents. Almost all other legal work is unreserved which means it can be provided by anybody. You don’t have to be a Solicitor to set up a business offering advice in say, employment law or welfare benefits. But if you are a solicitor you must still operate through a regulated body – such as a solicitors’ firm. The reason for this is that there are standards and protections that go with the solicitor brand. For example, all solicitors’ firms must carry professional indemnity insurance. They also must contribute to a compensation fund.
If a client instructs a solicitor, they know that if anything goes wrong there are levels in protection in place. If solicitor is negligent then the insurers must meet any claim. If the solicitor is guilty of misconduct, including failing to take out insurance, then the compensation fund is a safety net. This has been a foundation stone of our legal services.

The new code promises to change all of this.

Here is a summary that was published by the SRA last year –


There will be two separate sets of professional rules. One will cover individual solicitors and one will cover regulated firms. The proposal is that solicitors will be allowed to provide ‘unreserved’ services through unregulated organisations. So someone can set up an HR Consultancy and will be able to employ solicitors to offer legal advice to the public even though that consultancy is not regulated. The thinking behind the plans is that solicitors are a commercial disadvantage. The cost of regulation means that some organisations can provide the same advice at much lower cost. Insurance is one of the biggest overheads in most forms.

Why is this a concern? Firstly it threatens to devalue the solicitor brand. If someone can see a solicitor in an unregulated firm with no insurance or other regulatory protection then the security of knowing that there are guaranteed protections will disappear. This is not something that can be defined purely by cost. 

I can also see dangers, particularly for young lawyers. The SRA say that all solicitors will be subject to the rules that will apply to all solicitors regardless of where they work. But this will put huge pressure on those individuals. If an inexperienced solicitor is working for an unregulated organisation, they can find themselves conflicted between the demands of the business and their personal professional rules. Such solicitor might well have a strong claim for unfair dismissal but someone with a mortgage and a young family can still find themselves in a very vulnerable position.

We should all encourage moves to bring legal services into the 21st century. The more bodies providing access to legal advice the better. I am also all in favour of easing the burden of regulation. That would give compliance officers fewer sleepless nights! But there are also minimum standards of service and protections that must hand in hand with instructing a solicitor. Without this we will have a two-tier profession offering services to a confused public.

I do foresee major issues arising when the rules come into force later this year.

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