Sarah Mumford looks at how you should be starting to prepare for the SRA’s new Standards and Regulations.
The SRA’s Standards and Regulations 2019 (S&R19) will be in force in less than three months.
This article gives some high-level pointers for readers who are, and will continue to be, in authorised and regulated firms.
The rules relating to freelance lawyers will be touched on, but they deserve an article in itself once the crucial guidance on professional indemnity insurance (PII) is published.
Read the Codes
Don’t wait for guidance any longer – the whole point is that the Solicitors Regulation Authority (SRA) expects you to work out what to do starting with the Principles.
Start there and ‘show your workings’: this will help the “justify” part of the new obligations to justify compliance.
Many concepts are the same but, confusingly, often expressed in different language.
Review your systems
The Accounts Rules in particular have lost specific familiar deadlines such as the 14-day rule, to be replaced with words such as “prompt”.
Identify these and set out your internal expectations clearly. Amend your engagement documents for interest and commission (“financial benefits”) provisions.
Take the opportunity to ‘de-barnacle’ processes and procedures that have been in place for some time.
Note the ‘reversal of proof’ on referral fees (Code for Individuals (CFI) 5.2).
If this is something that might affect you, spend some time on procedures and controls and make sure that the right people in your firm are aware of them.
Review your risk register
A new risk with financial consequences: accepting undertakings from a freelance solicitor without understanding how these are backed financially.
Consider that risk in the different ways that might affect your firm and develop new procedures and guidance.
Understand the new enforcement strategy
Published in February 2019, this ties in with the ethos of the codes: ‘we expect high standards and this is what we will do if you don’t achieve them’.
Address this in your training.
Understand the ‘new ways of working’
Talk through the different ways in which a solicitor can now practice. The reduction in protections are not just relevant to the clients of freelancers.
Until the new S&R19, the entity type through which the other side practised was mainly of academic interest as the other side would almost always be an SRA authorised & regulated entity and therefore with, for example, Minimum Terms & Conditions for professional indemnity insurance.
The other side may not have:
- any PII at all if not practising in an authorised firm and not conducting a reserved legal activity, or
- “adequate and appropriate” PI insurance to conduct reserved legal activity – which in the absence of the promised guidance we must assume is ’MTC lite
It is of course in the nature of these things that any problems are likely to come to light in hindsight
These issues are not just relevant to the client of the freelancer. Can you accept their undertaking?
You can but only having assessed the nature of the insurance that will respond. Ask yourself:
- · what is the position of an undertaking from someone who isn’t a solicitor in an unauthorised firm?
- · how will you advise your colleagues and your clients?
- · will you need to amend your undertakings policy?
How will you address the likely increase in firms ceasing to operate a traditional client account and using third party managed accounts?
Ensure manager/partners are aware of the changes
1. The Code for Firms (CFF) Standard 8.1 details that owners of the business are jointly and severally responsible for compliance with the CFF.
2. Ensure that you have a robust reporting process within the firm up to the COLP, and a feedback loop back from the COLP as the S&R become clearer.
3. Make sure managers understand the importance of maintaining records to “demonstrate compliance” (CFF 2.2).
Train your staff
All staff should be aware of the particular requirements that come from working in a law firm.
It still comes as a surprise that private behaviour can have professional consequences whether or not you are a solicitor. Reinforce this.
Focus on the CFI and make sure that the underlying Principles are understood,
The key message must be not to look for what is or is not there.
Just because a specific provision has gone does not mean that it isn’t relevant.
Take Contract Races: the guidance and specific provisions have gone but the underlying obligations have not changed at all.
Train your litigators
Although there is nothing completely new this would be a good time to look at widely held assumptions and compare them with the new Code for Individuals (CFI) Standard 2.
Note that the adverbs “knowingly and recklessly” in current O (5.1) are not replicated in the new Code (CFI 1.4). Unless clarified, this could be a vexagant’s charter.
- The burden to the civil standard of proof in the SDT changes for matters referred after 25 November.
- Guidance which will be added to the main SRA website (and not on the beta site where the Codes are currently placed). Note also that the Codes are not in final form.
- Don’t forget to keep a copy of the 2011 Code for reference purposes. You may miss it when it is gone.