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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