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In 2011 the Solicitors Regulation Authority adopted a new Code of Conduct and a completely new approach to regulation, called “outcomes-focused regulation” or OFR. OFR is a sophisticated form of regulation requiring an adult relationship between the regulator and the regulated community involving a measure of trust. The new Code replaced black letter rules with broad “outcomes” which have to be achieved, but allowing law firms a degree of flexibility as to how those outcomes are met in their own practices. Clients vary infinitely from the vulnerable to the highly sophisticated. Firms should be left to develop their practices in a way best designed to serve their particular mix of clients.

There are problems with this; rather than looking up the rules law firms must think about how they approach the needs of their particular clients, and are entitled to choose their own way of delivering legal services within the relatively broad compulsory outcomes that have been set. And the regulator, the SRA, must allow some leeway and accept that “their way” is not the only way. Because firms are left to exercise judgement with very little guidance from the regulator (which is how OFR works) the SRA must accept that firms will not always get it right first time, but providing there are trying to get it right they should not be penalised for their reasonable attempts, as opposed to being given further guidance.

The SRA is not trusted by the profession. The SRA itself, in adopting OFR, recognised that it needed to change; that it had been a heavy-handed regulator, with a tick-box approach, inclined to act disproportionately in its response to mistakes by well-meaning solicitors. It officially embraced change and embarked on a major retraining exercise so that staff were imbued with the new culture, intended to build bridges with the profession and an improved and healthy relationship. It wants to be trusted and would like to think that practitioners and in particular firms’ compliance officers will pick up the phone and talk to them if there is a problem. It wants, in particular, to be recognised as a proportionate regulator.

It isn’t working yet.

The problem is that there is a disconnect between sensible people at the top of the organisation who set policies and seek to implement them in an insightful way, and those lower down who put those policies into practice on a day to day basis.

Two recent stories make the point. A very strange decision was made to prosecute a seven partner firm in the Solicitors Disciplinary Tribunal. It was so strange that leading counsel advising the firm (not I) wrote an advice which he suggested be copied by his clients to the SRA chief executive, Antony Townsend, as the prosecution was wholly unjustified and unreasonable. Queen’s Counsel do not lightly express such views and normally some further thought might be expected to be given to the matter. There can be no reasonable doubt that Mr Townsend was ‘protected’ and that the letter and advice did not reach him. After consideration of the matter at a departmental level the solicitors acting for the SRA in the prosecution wrote a lengthy letter justifying its position and insisting that the prosecution would proceed. Because I hold certain roles within the representative function of the Law Society I was able to bring the matter to the attention of another member of the SRA’s senior management team. I did so because it seemed obvious that the prosecution was wholly inconsistent with what could be expected to be the SRA’s philosophy under OFR. A few days later the SRA’s solicitors agreed to drop the proceedings.

A major international firm became the subject of an investigation by the SRA and responded appropriately to the SRA’s enquiries. Silence followed for many months. A member of SRA staff then informed the firm that it was intended to refer the whole firm (over 100 partners) to the Tribunal. No comment was made as to why the firm’s explanations were not regarded as satisfactory. On this occasion it proved possible to gain the attention of Mr Townsend personally, again through the intervention of the Law Society. A few days later the firm was informed that no action, at all, would be taken.

It is naturally very difficult to ask senior managers of a large organisation to become involved in individual maters in this way; these cases are highly exceptional, but the message is clear. Those taking regulatory action on a day to day basis, who enjoy enormous power and discretion, do not understand the much more sophisticated nature of OFR and the policies set at the top of the SRA, and those at the top do not know that their thoughtfully constructed policies are not being applied, and are probably not even understood.

© Andrew Hopper QC, August/December 2012

About Andrew Hopper QC
Andrew Hopper is a solicitor and Queen’s Counsel; still a rare combination. He was admitted a solicitor in 1972 and from 1988 has practised on his own account in a niche practice concerned with professional regulation and discipline, principally in relation to solicitors.

He was appointed Silk in 2001, the fifth solicitor Silk to be appointed and the first outside the City of London.

He is regarded by many as the foremost expert of his generation on the law and practice related to the regulation of solicitors.


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