SRA - one rule for you and one rule for me

There are increasingly heated discussions about how and where Solicitors can offer legal services to the public. To most people this seems fairly obvious. You go and see a Solicitor. But in a rapidly changing world this is could become the exception rather than the rule.

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. So 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 have to 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 have to carry professional indemnity insurance.  They also have to contribute to a compensation fund.

So 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 have to 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 SRA are planning to change all this.

In a consultation that has recently closed they plan to have 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.

I think this is a recipe for disaster. 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 solicitors will be subject to the rules that will apply to all of them regardless of where they work. But this will put huge pressure on some 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. 

The Legal Ombudsman has echoed this worry in its response –

“While a solicitor retains many of their obligations, such as competence, conflict of interest, complaint handling, these are not requirements for an unregulated firm. What should a solicitor do when these obligations come into conflict?”

http://www.legalfutures.co.uk/latest-news/creating-two-tier-profession-consumer-panel-joins-opposition-sra-plan

The plans have also been criticised by the Legal Services consumer Panel and the Law Society. I recently attended a forum in Liverpool where almost all of the lawyers present were opposed to the plans.

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

I hope that the SRA will listen to all of these criticisms and abandon what are badly thought out and dangerous proposals.