This is the final newsletter of 2018 – where did that year go?
It seems like just yesterday the profession was collectively fretting over GDPR. Despite the doom-and-gloom predictions, the world is still turning and legal work is still possible. (Although I would be interested to hear about any data protection war stories, if you have them).
Since then we’ve had insurance distribution and price transparency to keep us busy.
2019 will be largely about the implementation of the new SRA rules. And, as was pointed out to me today, the strategic implications for the relaxed practising arrangements. Are we going to see a rush of freelance solicitors? Will law firms hive off their non-reserved work into unregulated businesses? Will clients know the difference between the different tiers of solicitor? Will we see a dilution of our brand?
Like it or loathe it, these fundamental changes present significant opportunities and threats.
We’ll also be keeping an eye on how price transparency develops. Your website should now be fully compliant – if not, have you recorded a breach? I fully expect the areas of law covered to by the rules to be expanded. It clearly makes no sense to exclude some key practice areas.
And of course we might have some minor issues to deal with around the B-word.
Have a great weekend, Christmas and New Year
SRA Compliance Conference
This week saw the annual SRA COLP and COFA conference in Birmingham. Aside from the tense moment when one aggrieved member of public gate crashed the stage to air his grievances against his solicitor, the whole day was a great success.
The SRA Chief Executive, Paul Philip, and Chair, Enid Rowlands, took the opportunity to emphasise what they see as the improvements that the forthcoming rule changes will bring to the profession.
The theme throughout was the simplification of the rules to focus on what’s important. The SRA is “placing its trust in the profession” to essentially make the right call. What was clear from the questions from the floor was that there is some skepticism amongst the profession, to put it politely.
Guidance to fill the blanks in the slimmed-down rulebook will be rolled out by the SRA, particularly in relation to the new Accounts Rules, but non-adherence to guidance will not necessarily be considered a breach.
The Head of Forensic Investigation and Intelligence highlighted three main problem areas for firms to concentrate on:
- Residual balances
- Client account reconciliations
- Using the client account as a banking facility.
Juliet Oliver, General Counsel and Executive Director, indicated that the report setting out the conclusions of the consultation into reporting misconduct is due to be approved at the beginning of the new year. Whilst she obviously wasn’t able to pre-empt the final findings she did allude to the fact that there appeared to be consensus in favour of there being an objective element to the test eg. “reasonable grounds to believe serious misconduct”.
A really positive note for COLPs out there is that the SRA appears to share the concerns in relation the vulnerable position that COLPs often find themselves in. It seems that the SRA is considering including something in the rules that clearly spells out that someone making a report in good faith should suffer no detriment. The position of COLP able can sometimes be a lonely job, particularly when faced with partner opposition or internal pressures.
Whilst it was clearly apparent that the profession is feeling disgruntled by some of the reforms, conference attendees will have come away with a clearer understanding of what is coming and the SRA will have left with a greater awareness of the need for more clarity and support.
They should at least be applauded for putting on these free events to engage with the regulated community.
SRA publishes eye-watering Leigh Day costs
The SRA has confirmed that its costs in the failed Leigh Day prosecution were a staggering £3.1 million, a third of which was incurred in the failed appeal.
Following freedom of information demands, the regulator has also published “key correspondence” with former defence minister, Michael Fallon, the MOD and MOJ.
Why it matters
The profession will rightly ask the SRA difficult questions about its decision to prosecute this case and double down on a failed appeal. After all, this is a significant proportion of practising fees being squandered.
Further, there are some disturbing suggestions of inappropriate meddling from government departments, raising questions about the independence of the regulator. Was there a political aspect to this prosecution? We certainly hope not.
For those of you who missed it previously, Leigh Day wrote us a piece on their lessons learned from the SRA investigation process. Practical tips to print out and hope its never needed.
As a result of the Leigh Day case, we understand insurers are seeing a surge in demand for D&O policies.
SRA launch no-deal Brexit consultation re. QLT scheme exemption for non-UK lawyers
In a tumultuous week in terms of Brexit, the SRA has launched a new consultation regarding exemptions that may apply to non-UK lawyers in the event of a Brexit No-deal.
Currently, EU, Scottish, Northern Irish lawyers and English and Welsh barristers may apply to be exempt from the QLTS or individual questions from it if they can demonstrate knowledge of English and Welsh law and practice. The consultation will look at the potential implications of the UK leaving the EU without any special trade deals. This would mean that the UK would be bound by World Trade Organisations (WTO) rules which do not permit any preferential treatment to be given to nationals of different states.
The SRA is consulting on the potential options for the QLTS:
A) To permit no exemptions from the QLTS
B) To permit candidates from all non-UK jurisdictions to apply for exemptions but only from the whole of the multiple choice test of the objective structured clinical examination or both
Why it matters
The recent Government technical note highlighted the potential no-deal implications for UK lawyers practising in EU states and EU lawyers currently practising in the UK.
At the moment, European lawyers can register to practise in the UK as if they were solicitors, but under their home title. However, with the relevant Directive falling away, we could be left in a situation after transition where European lawyers’ practising rights are severely restricted. This consultation appears to be attempting to soften the landing for European lawyers by slightly easing the route to cross-qualification, which seems like a sensible suggestion.
Lower PII limit scrapped – at last!
The SRA Chief Executive, Paul Philip, announced at the recent SRA conference in Birmingham that the plans to reduce the minimum PII cover to £500,000 has been but on the back burner. It seems that they have finally realised that the proposal was, frankly, reckless.
The proposal faced considerable criticism from within the profession. It would have by definition have lowered the protection available to clients, for little in the way of cost saving.
Focus now seems to be placed on resolving compensation fund issues and reviewing the current rules.
Why it matters
It must be said, this always seemed like a particularly bad idea. The SRA had grand plans that it would encourage lower insurance costs for firms, resulting in lower prices for consumers.
However, the insurance industry was telling the regulator that dreams of significant premium reduction was fanciful, for the simple fact that lower value claims are built into the current pricing (98% of claims sit under £500,000).
On the plus side, at least the consultation process worked.
We only hope that the SRA does not intend to start reducing other protections, such as limiting access to the Compensation Fund.
ICO issues no deal Brexit data protection guidance
The Information Commissioner’s Office (ICO) has helpfully published guidance to help SMEs prepare for a no-deal Brexit in terms of data protection.
Essentially, they say that the GDPR will continue to be enshrined in UK law therefore the general rules that businesses will have to follow will largely remain unchanged.
What will need to be addressed is any data flow that businesses may rely on between the UK and EEA. This is likely to be affected if no withdrawal agreement is reached – essentially, the UK will be treated as a third country.
EEA jurisdictions will need to ensure that there are sufficient safeguards in place before sending personal data to the UK. UK business may therefore wish to put in place standard contractual clauses that specifically deal with this, although as we have seen with transfer of data with the USA, it is not always that simple.
The ICO has prepared a succinct “Six Steps to Take guide”.
Disciplinary decisions
- Azhar Islam Khan, a criminal defence solicitor, has been struck off following his conviction for tax evasion.
- Martin Edward Burnett has been struck off having been found to have prepared and served a false grant of probate to a building society.
- Neil Adrian Aiston has been struck off for having permitted client money to be used for other client matters.