We now know that the SRA’s regulatory changes are approved and will come into effect next year.
This has been a two year wait. Whilst most of the changes to the Handbook may not be too controversial, don’t underestimate the practical implications.
The new Accounts Rules alone will need to be grappled with by accounts teams – and perhaps unhelpfully, significant gaps are yet to be filled by the promised guidance documents. And of course, everyone will need some form of training on all of the new conduct rules and principles, albeit that there are no real substantive changes.
The real bone of contention is the change to the Practice Framework Rules, allowing solicitors to practise in unregulated businesses or on a freelance basis. We have identified some potential opportunities and threats below.
And just a friendly reminder – you now have less than three weeks to implement the price and service transparency requirements. If my past experience of web designers is anything to go by, you shouldn’t leave it too late. Unlike some other rule changes, this one is easy for the SRA to check up on.
If you would like us to review your transparency wording:
- this is included as part of our clients’ COLP-Help package
- we are offering
LSB approves SRA Handbook changes – Law Society none too pleased.
Whilst we may have all assumed that the Handbook changes were a given, it wasn’t until last week that they were officially given their approval by the LSB.
Whilst most of the rule changes contained in the new Handbook (or whatever the SRA decides to call it) are not particularly controversial, there is one element that has faced vociferous opposition from Chancery Lane: solicitors practising in unregulated businesses.
The Law Society is of the view that the new rules have “sacrificed the best interests of the public they serve to protect“.
They highlight the confusion that the public will inevitably face. There will effectively be two tiers of solicitor delivering non-reserved legal work: those working in traditional firms/sole practices and those employed by unregulated businesses.
By sitting outside of regulation, the costs of practice will be lower. And so, too, will the level of protection available to the public (think minimum insurance, access to the compensation fund etc.).
Add to the mix the new category of ‘freelance’ solicitor – again, not subject to the full SRA regime – then you have a confusing choice as a consumer.
Why it matters
As with most change, like it or not there are both opportunities and threats to the profession and public.
Opportunity: hive off non-reserved work to a separate business and save on insurance, SRA fees and regulatory oversight. Use the savings to increase margins or improve access to justice e.g. more affordable services to small businesses
Threat: the public is faced with a lower level of protection overall, undermining the confidence in the profession when things go wrong
Opportunity: shout loud and proud about your regulated status, to appeal to those who understand the difference
Threat: confusion damages the brand of solicitor
Opportunity: more choice opens up the profession and drives innovation, investment and social mobility
Threat: solicitors practising in unregulated businesses face ethical dilemmas and pressures from owners with no legal background, and no duties to a regulator.
Stress no excuse for dishonesty, High Court rules
Three solicitors have been struck off for dishonesty following a significant High Court ruling earlier this week. Sovani James, Peter Naylor and Esteddar Macgregor were originally given suspended sentences by the SDT however this was overturned by the High Court on appeal by the SRA. Each solicitor had raised mental health concerns in mitigation.
The High Court insisted that the “pressure of work or the working environment cannot ever justify dishonesty by a solicitor“.
Whilst this case has, understandably, gained significant attention across the profession, it follows a number of reported cases in recent years where stressed solicitors, particularly amongst the junior ranks, have acted in such ways which lead to disciplinary action being taken often leading to them leaving the profession. Indeed, we highlighted the concerning trend in our blog back in April 2017.
Why it matters
The Sovani James case seems particularly harsh. It is right that solicitors are held to a higher moral standard than the man on the street. It is an established principle that dishonesty should result in strike off.
However, it does seem that an opportunity has been missed here to acknowledge and address mental health concerns in our profession. Particularly when that dishonest behaviour can be shown to be at least in part caused by toxic work environments.
Mental heath and the well-being solicitors has been largely overlooked by the profession. We may hear soundbites from the regulators during their quiet times, but real practical solutions are few and far between. Why not look at the firm or managers that cause such misery to their workers?
High pressured working environments toxic cultures is having a detrimental impact upon the manner in which solicitors would ordinarily conduct themselves. It is apparent that there does now need to be an acknowledgement by the profession that this is a serious trend that needs to be addressed.
The SRA regulates in the public interest. It follows then that protecting the interests and well-being of the very people entrusted to serve the public should be of paramount importance.
SQE to be launched in 2021
After months (ahem – years) of speculation, the SRA has announced that the Solicitors Qualification Exam (SQE) will be launched in Autumn 2021.
If you haven’t been paying attention, the exam will be split into two parts. Stage 1 assesses legal knowledge by way of multiple choice exam. Stage 2 is all about practical skills. A two year period of workplace training is also required – but not necessarily in a law firm.
The SRA has outlined the likely fees as being:
- Stage 1 – £1,100 to £1,650
- Stage 2 – £1,900 to £2,850.
Students already studying a law degree or Graduate Diploma in Law prior to September 2021 may choose which route to qualification they are going to take. From September 2021 onward every candidate must qualify through the SQE.
Why it matters
This is a massive shift in the way in which solicitors have traditionally trained and qualified. It potentially takes access to the profession out of the hands of institutions and private practices.
The SRA believes that the fee structure will make qualification more accessible. LPC fees alone are currently as much as £16,700. On the face of it, that seems to be a fair assessment.
The proposals have, unsurprisingly perhaps, faced widespread criticism from legal educators. LPC providers are facing dwindling intakes, and now have to scramble to find new ways to attract future candidates. There will inevitably be more choice for candidates as the market develops.
There is of course a nagging reservation that the multiple choice format of Stage 1 will, or will be perceived to, “dumb down” the profession.
One positive is that candidates will be able to learn on-the-job, so unscrupulous firms will have less leverage by dangling the training contract carrot.
Only one AML helpline, SRA and Law Society told
OPBAS (remember them) was set up to ensure that regulatory bodies are adequately supervising AML and conducted its first supervisory visit of both bodies.
One of its findings and recommendations was that there should only be one helpline available to avoid solicitors being provided with conflicting advice.
New and updated Law Society Practice Notes
- Comprehensive No-deal Brexit guidance to give consideration to:
- Consent form: Access to client health records – useful guidance for solicitors when obtaining health records
- Simon Heaney, Ruth Kearns and Tracy Winstanley, Directors of Heaney Watson have been fined £40k after failing to pay disbursements and using them to bolster the office account as it fell into decline.
- Abosede Akinleye, a former solicitor, has been struck off after having made false representations in relation to a discretionary housing benefit application.
- Joanne Power, a sole practitioner, has been struck off and ordered to pay £46,645 in costs for having over billed estate clients, resided in one property that was due to one beneficiary and delayed paying beneficiaries.