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In-house Division

Six things you need to know about the new SRA handbook

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  • Pearl Moses

Pearl Moses looks at the main changes the SRA is proposing in the revised SRA handbook, and how they may provide opportunities for in-house lawyers.

The key changes

Last year the SRA consulted on its proposals for the new look handbook and following on from that they have decided to go ahead with most of their original proposals, including:

  1. a new reduced set of six principles
  2. two new shorter codes of conduct - one for solicitors and one for firms
  3. the removal of ‘outcomes’ and indicative behaviours
  4. the removal of restrictions on solicitors delivering non-reserved services to the public from unregulated entities
  5. changes to the accounts rules
  6. new opportunities under the re-vamped practice framework rules.

The SRA has been keen to take a less prescriptive approach to regulation, allowing solicitors more freedom in the way they chose to practise, hence their decision to create a shorter and more simplified handbook.

1. The principles

The current 10 mandatory principles in the 2011 code are reduced to six. They include:

  1. Uphold the rule of law and the proper administration of justice
  2. Act in a way that upholds public trust and confidence in the solicitors’ profession and in legal services provided by authorised persons
  3. Act with independence
  4. Act with honesty and with integrity
  5. Act in a way that encourages equality, diversity and inclusion
  6. Act in the best interest of each client.

According to the SRA the four removed obligations will be incorporated elsewhere within the codes of conduct.

2. Codes of conduct

There will now be two separate codes of conduct, one for solicitors and one for firms. Although there is some overlap and duplication between the two, the firm code focuses more on management issues such as policies and procedures and the individual code on the ethics and behaviours of solicitors, RELs and RFLs.

3. Outcomes and indicative behaviours

The outcomes and indicative behaviours that appear in the current code will no longer be present in the handbook. In light of this minimalist approach it is difficult to assess how the two codes of conduct would work in practice without clear guidance being published. To address this the SRA say they will be producing a toolkit of resources which will be launched with the new codes of conduct.

4. Removal of restrictions on where solicitors can practise

As promised, the SRA will remove the current restrictions on solicitors providing non-reserved legal services to the public and allow them to practise outside the regulated businesses as defined in the Legal Services Act 2007.

At present, this is very much restricted by rules 1 and 4 of the practice framework rules which allow in-house solicitors to act only for their employers and those closely associated with their employers. There are currently very limited exceptions but if the change goes through solicitors will be allowed to be employed, as such, by any entity or individual to provide legal services, such as will writing or general legal advice, to the public, provided it is non-reserved work.

In light of this significant development, important and timely questions for in-house solicitors will arise, including:

  • If the practising restrictions are removed, do I (or my employer) want to develop our legal service business in a different direction?
  • Do we want to provide non-reserved legal activities to members of the public through an Alternative Business Structure (ABS)?

This is perhaps the biggest change of all and the one with the most far-reaching implications both for the profession and for the public using legal services.

5. Accounts rules

For those in-house lawyers affected, the SRA has decided to simplify and shorten the current accounts rules. Key changes include:

  • a new definition of client money and client liability
  • simplification of the rules
  • third party managed accounts.

6. New practice framework rules

The SRA have recently opened a further consultation, ‘Looking to the future: phase two of our handbook reforms’ on the rest of the handbook proposals, including new requirements affecting both the authorisation and practice framework rules. One proposal will make it easier for solicitors to provide reserved legal services on a freelance basis to the public. They would not be required to register as a sole practitioner or be employed by an authorised firm on condition that they would not hold client money or employ people (but they would have to have PI insurance).

The new consultation should clarify a lot of the changes affecting the in-house sector so watch this space.

Pearl Moses is head of Risk and Compliance at the Law Society. The Risk and Compliance advisory service provides advice and bespoke support and training specifically tailored for the in-house sector.

 

 

 

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