Whilst we are all bracing ourselves for the winter months, how about getting your mug of cocoa ready and get stuck into our latest roundup of the news from the world of Risk & Compliance?
Second Consultation on the Solicitors Qualifying Examination (SQE)
The SRA has launched their latest consultation on its proposal on qualifying as a solicitor. The traditional route of qualifying is a degree followed by the Legal Practice Course and Training Contract. One of the issues is that the quality of the Legal Practice Course (LPC) varies between providers, with pass rates ranging from below 50% to 100%. In addition the cost of the course is now an average of £12,000. Students are then faced with incredible competition for training contracts, with the number of LPC graduates massively outstripping the number of vacancies for training contracts. Under the proposed Solicitors Qualifying Examination (SQE) work experience could be acquired by working in a student law clinic or as a paralegal as well as through a formal training contract. The SQE fees, although yet to be finalised, are proposed to be less than the LPC. The consultation opened on the 3rd October 2016 and runs until the 9th January 2017.
Why is it important?
If it goes through, it will fundamentally change the route to qualification. There have been some accusations of dumbing down, but the SRA say quality standards will be maintained. The proposals could mean the end of training contracts, at least in some firms.
Account rule changes – will you need a client account?
Under the current proposals for the reform in the Account Rules (consultation now closed), payment on account of costs and disbursements will no longer be regarded as client money. What this means in practice is that many law firms who do not undertake transactional business, and who only use client account for receiving money on account, would be able to dispense with the need for a client account altogether. The consultation is also looking at simplifying the account rules and providing an alternative to the holding of client money through the use of third party managed accounts. Together these represent the biggest changes made to the account rules in decades.
Why is it important?
For all firms the proposed changes should mean increased cash flow and for many, it could avoid the need for a client account at all. On the flip side, there is real risk that if cash-flow is poor, the client’s money will not be protected. Surely there will need to be some security that if client pays money on account, but changes his mind before any work is undertaken, that this money will be paid back? There is certainly plenty for the SRA to clarify about the proposed changes.
The one thing you must do if you want more clients…
..no doubt that headline grabbed your attention! Michelle Peters has prepared our guest blog this month, and she provides invaluable advice on how to get more clients and increase your profits without working more hours. Michelle, also known as the Business Instructor, is a former solicitor from a Magic Circle firm. An essential read for any lawyer and certainly all business owners, Michelle’s blog gives workable advice on how to educate prospective clients about why they need your services.
Fourth Money Laundering Directive
The Government has invited views on the latest directive which Member States (yes that still includes us for now!) have until June 2017 to transpose into national law.
The directive seeks to give effect to updated international anti-money laundering and counter-financing of terrorism standards set by the Financial Action Task Force. Changes have already been made to the Directive in light of the Panama Papers and recent terrorist atrocities – we anticipate even more changes before the government have a chance to implement this Directive!
Why it’s important?
Even though we are leaving the EU, money laundering legislation isn’t going to go away. Even if EU Directives do not apply in the future, if we are going to maintain our standing internationally, we must have equal or better safeguards in place than the EU. We can’t see the government backtracking on the directive.
A new approach to continuing competence
Only two weeks to go until the 1st November and the changes to the CPD. Are you ready? Find out all you need to know in our blog and free template!
The changing landscape of property fraud
Many lawyers (and we are sure all the conveyancers out there!) are still shaking in the aftermath of the case of Purrunsing, but we have some good news for you in the form of the case of P & P Property Ltd v OWC and Crownvent. The two cases involve a fraudster impersonating the seller during a house sale, and then disappearing with the proceeds of the sale. In Purrunsing, both the buyer and the seller’s solicitor were found to be liable in breach of trust to the victim purchaser, the seller’s solicitor had failed to carry out adequate due diligence and the buyer’s solicitor had asked whether the seller had the right to sell the property but failed to advise their client of the unsatisfactory reply.
In P&P the Court came to a different conclusion. The seller’s solicitor had carried out all the necessary ID checks and the Deputy High Court Judge, Robin Dicker QC found that while solicitors checks were designed to reduce the risk of fraud, they could not reasonably be thought to eliminate it. He further commented that the seller’s solicitor could not be in a position of guaranteeing their client was the true owner. In P &P there was no claim against the buyer’s solicitor.
Why is it important?
The only apparent difference between the actions of the seller’s solicitors in both cases is that in Purrunsing the solicitor failed to do money laundering checks. This just demonstrates again the importance of having adequate due diligence measures in place. Purrunsing also highlights it is not adequate to only ask the question, you need to be satisfied with the answer.
The future of Mckenzie friends
Paid Mckenzie friends are in the headlines again this week. David Bright, who was a paid Mckenzie friend in a family dispute, was found guilty of submitting a false report written by someone claiming to be a psychologist. He is due to be sentenced this week for perverting the course of justice. This follows a number of instances this year involving paid Mckenzie friends, leading to a consultation by the HM Judiciairy which closed in June. The consultation proposed a ban on fee-charging McKenzie friends, a sign up to a code of conduct and that the rules governing the courts approach to Mckenzie friends be legally codified.
Why is it important?
Following the cuts in legal aid, use of paid McKenzie friends has certainly been on the rise but lack of regulation leads to questions of client protection and a level playing field with regulated professionals.