Articles Professional Discipline 27th Nov 2019

The New SRA Standards and Regulations: a StaR is Born

Gavin Irwin and Helen Lavery review the demise of the SRA Handbook

On 25th November 2019, the Solicitors Regulation Authority (‘SRA’) Standards and Regulations (‘StaRs’) came into force and replaced the current SRA Handbook. This marked only the fourth change to the Solicitors Code of Conduct in 12 years. The latest changes are designed to offer solicitors greater flexibility.

The key changes include: a new set of SRA principles, two new separate codes of conduct for individual solicitors and firms, changes to the disciplinary rules and dramatically shortened accounts rules.

The Principles

The fundamental ethical Principles that apply to both individual solicitors and firms have been reduced down from ten to just seven. Four of the existing Principles have been removed: No. 5, (providing a proper standard of service); No. 7, (complying with legal and regulatory obligations); No. 8 (running businesses in accordance with proper governance, etc.); and, No. 10 (protection of client money). However, these principles have not been removed from the regime, instead they have been incorporated elsewhere and can now be found in the main body of the two separate Codes of Conduct.

The whittling down of the Principles is also counterbalanced by the addition of a new principle requiring solicitors and firms to act honestly. This requirement is in addition to the existing and retained principle requiring solicitors to act with integrity. The separate treatment of honesty and integrity arises after recent judicial treatment created distinct and divergent meanings for each term.  See Wingate and Evans v SRA; SRA v Mallins [2018] EWCA Civ 366,  and, most recently, SRA v Siaw [2019] EWHC 2737 (Admin).

Two New Codes of Conduct

The new Codes of Conduct are markedly more succinct than their single, 2011 predecessor and the numerous Outcomes and Indicative Behaviours have been jettisoned. The new Code of Conduct for Solicitors, Registered European Lawyers and Registered Foreign Lawyers sets out the standards of professionalism expected from individual authorised to provide legal services. The new Code of Conduct for Firms meanwhile establishes the standards required by firms, requiring them to monitor their financial stability.  Rule 8.1 clarifies that it is the responsibility of a firm’s managers to ensure the firm’s compliance with the Code. Meanwhile, rules 9.1 and 9.2 detail the duties for Compliance Officers for Legal Practice (‘COLP’) and Compliance Officers for Finance and Administration (‘COFA’).

However, the brevity of the new codes does not necessarily reflect a reduction in regulation. Most notably, the SRA has made it clear that it could take action not just against managers, COLPs and COFAs for breaches of the SRA Code of Conduct for Firms, but also against individual employees. In the past, the SRA relied upon section 43 of the Solicitors Act 1974, which only applied in circumstances where: an employee had been convicted of a criminal offence; or, had occasioned or been a party to an act or default in relation to a legal practice of such a nature that it was undesirable for him to be involved in legal practice.  The new regime therefore establishes an increase in the SRA’s reach over employees and, in overlapping the two codes, somewhat undermines the separation of powers it sought to create.

Freelance Solicitors

The new reforms open up the legal market to freelancers. Under regulation 10.2(a) of the new Authorisation of Individuals Regulations, an individual solicitor providing non-reserved legal services will no longer be obliged to have his/her practice authorised by the SRA. Moreover, under Regulation 10.2(b), individual solicitors will also be able to provide reserved legal services on a freelance basis so long as they satisfy certain requirements. Amongst the requirements, solicitors need to: have practised for 3 years or more since admission; practise in their own name; employ no one in connection with their services; and, maintain professional indemnity insurance.  A freelance solicitor must not hold client money (other than on account of costs and disbursements).

The Regulatory and Disciplinary Rules

The new Disciplinary Rules govern how the SRA will investigate and take disciplinary and regulatory action. Perhaps the most significant change is that the SRA will now determine allegations to the civil standard – on the balance of probabilities as opposed to beyond reasonable doubt. The Solicitors Disciplinary Tribunal is similarly changing its rules so that it too will decide cases to the civil standard. These changes bring both the SRA and the SDT into line with other regulatory bodies such as the Bar Standards Board.

Rule 1.2 allows for non-solicitors to be caught by the disciplinary rules in certain circumstances. Most notably, where an allegation is made which “raises a question that the person has otherwise engaged in conduct that indicates they should be made subject to a decision under rule 3.1”. This rule applies to anyone whether they are a solicitor or not. Rule 3.1 then sets out the powers of the SRA where an allegation has been found to be proved. This is an extremely wide provision, and amounts to a significant extension of the SRA’s reach over non-solicitor employees of law firms.

The Accounts Rules

The Accounts Rules have been drastically reduced and now number only 13 (previously 52). The stated purpose of this overhaul is to ensure a simpler regime with a sharpened focus on the principles of keeping client money safe, rather than on a broad vista of technical rules.

In Conclusion

It may be that the most significant changes will lie in the application of the Enforcement Strategy, rather than the rules themselves, and it seems inevitable that there will be renewed scrutiny on conduct away from the workplace, including the use of social media.  Practitioners may be rolling their eyes to the heavens, wondering where the SRA’s remit ends and, existentially, where the private world ends and the public begins.  However, this StaR is certainly brighter than the one it replaces and, together with associated guidance, arguably brings much needed clarity to what is acceptable and what is not.

Gavin Irwin and Helen Lavery

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