Introduction to the SRA’s 2019 Standards and Regulations

Jamie Smith QC and Miles Harris |

Overview

  1. On 25 November 2019 the SRA’s new Standards and Regulations will come into force. In many respects the substance of what is expected of the profession will remain much the same, but the new regime will see major changes to the regulations and rules through which those expectations are expressed and will be enforced. Both practising solicitors and those involved in advising them on their regulatory obligations must familiarise themselves with what will change. The aim of this series is to highlight the major changes and give some thoughts on what their implications may be.
  2. According to SRA publications, the new regulatory model aims to have shorter and more targeted rules that focus on protecting the public and their money while reducing the burden on solicitors and law firms and allowing them more freedom to use their professional judgement in considering how to meet the standards required of them. The SRA has also made clear that the changes are intended to reflect changes to the legal services market and the way clients access services by removing restrictions on how solicitors can work.
  3. The key changes being introduced include:
    1. A new set of SRA Principles;
    2. New and separate codes of conduct for individual solicitors and firms;
    3. Shorter Accounts Rules;
    4. Freeing up solicitors to carry out ‘non-reserved’ legal work from within a business not regulated by a legal services regulator;
    5. Allowing solicitors to provide reserved legal services on a freelance basis; and,
    6. Changes to the disciplinary rules.
  1. In this article, we will briefly summarise these key changes. Later in the series, our colleagues Clare Dixon and Helen Evans will discuss in detail the evolving disciplinary landscape; and Ben Hubble QC and Paul Parker will describe the new Accounts Rules.

New SRA Principles

  1. There are to be only 7 Principles comprising the fundamental tenets of ethical behaviour that the SRA expects all those it regulates to uphold, both individuals and firms. This is a reduction from the present 10.
  2. Four of the existing Principles have been removed: 5 (providing a proper standard of service) 7 (complying with legal and regulatory obligations), 8 (running businesses in accordance with proper governance etc) and 10 (protection of client money). It may be said that none of these ever needed to be elevated to the status of principles. Further, in the case of Principle 8, the creation of two codes (see below) makes its removal logical.
  3. However, the removal of 4 Principles is counterbalanced by the addition of a new Principle requiring solicitors and firms to act honestly. This is in addition to the existing and retained obligation to act with integrity. The separate treatment of honesty and integrity in the new regime reflects the distinct meaning of these terms confirmed in Wingate v SRA and SRA v Malins [2018] EWCA Civ 366; [2018] 1 WLR 3969 (CA).

Two New Codes of Conduct

  1. While the new set of Principles will be common to individuals and firms, there are to be two new Codes of Conduct.
  2. The SRA Code of Conduct for Solicitors, RELs and RFLs describes the standards of professionalism required of individuals authorised to provide legal services. The SRA Code of Conduct for Firms describes the standards and business controls the SRA expects of firms authorised to provide legal services; the stated aim of these rules is to create and maintain the “right culture and environment for the delivery of competent and ethical legal services to clients”.
  3. The Code of Conduct for Firms differs from the Code of Conduct for Solicitors, RELS and RFLs, reflecting the different role firms are expected to play in upholding the SRA’s Principles. However, the combined substance of the obligations the two codes impose has not changed radically. Further, both Codes are much shorter and simpler than the existing Code of Conduct. The approach of having lengthy lists of Outcomes accompanied by even more lengthy lists of Indicative Behaviours has been abandoned. Instead, there are much shorter lists of what solicitors or firms can or cannot do, without any gloss. The SRA has sought to accentuate the positives by the trust this approach places in professional judgement. However, this less prescriptive approach will inevitably create room for uncertainty and argument.

New and Shorter Accounts Rules

  1. The extensive and prescriptive rules are to be replaced by a new and dramatically shorter set of Accounts Rules. The existing 52 Rules (many of which have numerous sub-rules) are to be reduced to just 13.

Freedom for solicitors to carry out Non-Reserved Activities

  1. An individual solicitor providing non-reserved legal services will no longer be obliged to have his/her practice authorised by the SRA (see reg. 10.2(a) of the new Authorisation of Individuals Regulations). They can still seek authorisation if they wish, perhaps to reassure clients that their practice has the protections that arise from being authorised, such as the requirement to have professional indemnity insurance. However, they will now be free to provide non-reserved legal services on a freelance basis.

Freelance solicitors providing Reserved Legal Services

  1. Although in general individual solicitors will still only be able to provide reserved legal services through authorised practice, under Regulation 10.2(b) of the new Authorisation of Individuals Regulations, individual solicitors will also be able to provide reserved legal services on a freelance basis so long as they satisfy various requirements. Among other things, the solicitors need: to have practised for 3 years or more since admission, to practise in their own name, to employ no one else in connection with the services they provide, to maintain professional indemnity insurance, and to hold no client money unless it is on account of costs and disbursements. This new freedom is aimed at allowing solicitors to be more flexible and so more competitive, without reducing client protection.

Disciplinary rules

  1. The amendments to the SRA Regulatory and Disciplinary Procedure Rules go hand in hand with the revised Enforcement Strategy (published in February 2019). As our colleagues Helen Evans and Clare Dixon will address, interesting questions arise as to the taking of enforcement action against firms, on the one hand, and separately against individuals, on the other.