Executive regulation

Members of the Chartered Institute of Legal Executives (CILEX) have experienced much change over the last few years – with more to come. Many of these changes seek to align even more closely the status of CILEX members with that of solicitors, despite widespread criticism and concern over this approach.

Although CILEX’s desire to align the status of its members with that of solicitors comes as little surprise – it has been seeking parity of standards and the right to practise for some time – it is fair to say that the latest proposed changes, as explored in this article, are the most extensive so far. These will have fundamental and wide-ranging implications not only for CILEX members, but also for the public and the solicitors’ profession.

Regulation of CILEX members

Since 2022, CILEX has been in discussions with CILEx Regulation Limited (CRL) and the Solicitors Regulation Authority (SRA) about the redelegation of the regulation of CILEX members from CRL to the SRA. While the initial proposal was limited to the redelegation of authorised CILEX members – being those authorised to provide one or more reserved legal activities (namely, fellows / chartered legal executives, CILEX practitioners, CILEX-ACCA probate practitioners and Crown Prosecution Service associate prosecutors) along with CILEX-authorised firms and Association of Chartered Certified Accountants (ACCA) probate firms – it was later extended to all CILEX members (in other words, students, paralegals and advanced paralegals).

Rationale for change

The SRA and CILEX have raised some persuasive reasons for the redelegation:

• Overlap and duplication: Around 75% of CILEX members work in SRA-authorised firms and are therefore regulated by both CILEX and the SRA (as the SRA regulates the conduct of employees of authorised firms). The redelegation will remove this overlap and duplication.
• Cost: There will be a cost efficiency in the SRA taking over the regulation of CILEX members. It is arguably disproportionate for CRL to incur its own regulatory costs when it regulates only 21,000 or so members (which includes both authorised and non-authorised persons) and fewer than 110 firms. In contrast, the SRA regulates over 200,000 solicitors and over 9,000 law firms and can accommodate the redelegation with minimal impact on its resources and day-to-day activities.
• Improving public protection: CILEX’s compensation fund is more limited than the SRA compensation fund. It does not cover non-reserved work (unlike the SRA compensation fund), and the maximum grant is significantly lower (£500k as opposed to £2m). While the SRA compensation fund will not initially be available to authorised CILEX bodies (which are explained further on page 30) and to fellows / CILEX practitioners who provide unreserved work outside of a regulated body, the SRA will look to incorporate them through statutory instrument in the future.
• Supporting public confidence: By simplifying the landscape, it will make it easier for consumers to understand and access regulatory services, as the SRA will be the sole regulator for the two professions.
• Consistency: It will address the regulation of new and emerging forms of legal services in an integrated way across both professions. To promote consistency, the SRA says it will seek to align the CILEx Code of Conduct with its own.

Criticisms

At the time of CILEX’s initial proposal, no other approved regulator had taken steps to redelegate its regulatory functions to another regulatory body. Such a bold move was uncharted territory and would effectively be existential for CRL. It therefore comes as little surprise that it has been widely criticised.

In July 2024, CRL’s board said it considered that the proposal was unlawful, would lessen consumer protection and that a significant number of CILEX members did not want to change regulator.

The Law Society’s concerns are that redelegation will have a negative impact on consumers, the wider public interest and the regulatory objectives. In 2024, Ian Jeffery, chief executive officer of the Law Society, said: “The change will cause consumer confusion, as it will be less clear which profession is which, and where different authorisations for practice areas apply. This is likely to be a particular problem for those with complex legal issues, or vulnerable consumers.”

Jeffery also expressed concerns that the redelegation could adversely affect the SRA’s ability to regulate the solicitors’ profession in a way that supports and promotes the regulatory objectives, and referred to the recent collapses of Axiom Ince, Metamorph, Kingly Solicitors and the SSB Group. These concerns may now carry even more weight following the decision of the Legal Services Board (LSB) to initiate enforcement action against the SRA due to its failures in relation to Axiom Ince.

The SRA responded to these concerns on 1 July 2024, saying, in essence, that there remained strong consumer benefits in proceeding with the redelegation. It said it would take over publication of the CILEX Authorised Practitioners Directory, and its website and branding would help consumers understand where solicitors and CILEX members have equivalent practising rights and where they do not. It also emphasised that there would be no cross-funding or subsidy of the two professions.

On 25 June 2024, the SRA’s board accepted the redelegation of both authorised and non-authorised CILEX members. We are still awaiting confirmation from CILEX’s board as to whether it will proceed. If it does, both CILEX and the SRA will need to submit their proposals to the LSB for approval.

Regulatory changes

The SRA published proposed changes to its Standards and Regulations with its consultations in August 2023 and March 2024. These provided details of a new code of conduct for CILEX members (SRA CILEX Code of Conduct), authorisation arrangements and investigation and enforcement matters.

Some of the material points from the SRA’s proposal include the following:

Principles and code of conduct

It is fair to say that the SRA CILEX Code of Conduct is more onerous than the existing Code of Conduct for Solicitors, RELs, RFLs and RSLs (the solicitors’ code). Not only does it contain virtually all the obligations found in the solicitors’ code, but it also includes additional regulatory obligations as well.

For example, paragraph 3.6(a) in the SRA CILEX Code of Conduct includes an obligation for CILEX members to ensure (as appropriate in the circumstances) that they and their business, its processes and practices adequately assist consumers and clients to access justice and the full range of legal services. Paragraph 3.6(b) requires CILEX members and their businesses to provide each client with an equal opportunity to secure a favourable outcome in their matter, considering their vulnerability or susceptibility to discrimination. These obligations are nowhere to be found in either the solicitors’ code or the Code of Conduct for Firms (although they feature in CILEX’s existing code).

There are also additional principles that apply only to CILEX members: there are nine CILEX principles against seven SRA principles. The CILEX principles include additional requirements to comply with legal and regulatory obligations, to act competently, to act effectively and in accordance with proper governance and sound financial and risk management principles, and to protect client money and assets.

These may sound familiar, as similar principles were contained in the 2011 SRA Handbook but were removed when the Standards and Regulations came into force. However, they have been included within the CILEX principles even though several of them are arguably unnecessary. For example, CILEX principle 9 (to protect client money and assets) is already covered by paragraph 4.2 of the SRA CILEX Code of Conduct (which requires CILEX members to safeguard money and assets entrusted to them by clients and others).

Given that two of the drivers for having a sole regulator are consistency and removing overlap, duplication and confusion, having different principles (and in some instances obligations under the respective codes) for the two professions may run contrary to this.

Authorisation and disciplinary matters

The position for individuals authorised by CRL is straightforward in that they will not need to reapply to the SRA for authorisation.

The position for entities is slightly more complicated. The SRA proposes to reauthorise existing CILEX entities as either recognised or licensed bodies where they meet the authorisation requirements: namely, where their owners and managers include a solicitor (in the case of recognised bodies) or a non-authorised individual (in the case of licensed bodies). The SRA’s existing regulatory arrangements will then apply to them as they do for any other SRA-regulated firm.

There will then be two new categories of authorised firm:

• Authorised CILEX bodies (entities that are owned and managed solely by CILEX fellows and/or CILEX practitioners): For these firms (and those passported SRA firms whose owners and managers do not include a solicitor), their authorisation to provide reserved work will be based on the practising rights of the authorised CILEX lawyers who own and manage them. The SRA said in its 2023 consultation that most of its existing requirements, including the Code of Conduct for Firms and the Transparency Rules, will apply to these bodies.
• CILEX-ACCA probate firms: These are separate entities set up by accountancy practices authorised and regulated by the ACCA. They are authorised by CRL to provide reserved non-contentious probate services solely as an ancillary activity to the accountancy work of the practice. They have a separate regime, which the SRA proposes to retain, and it will reauthorise them as SRA-ACCA probate firms.

There are ramifications in changing the regulatory status of these bodies:

• Insurance: CRL requires a minimum cover of £2m for all CILEX entities. Those incorporated CILEX entities that are reauthorised as SRA firms, including authorised CILEX bodies, will need to obtain a minimum cover of £3m rather than £2m per claim (although this will not apply to CILEX-ACCA probate firms). This represents a significant increase in the minimum level of cover that they need to hold.
• Fining powers: CRL’s disciplinary tribunal can impose fines of up to £250m against a body authorised by CILEX. If the SRA reauthorises the firm as a licensed body then the same would apply, but not if it were reauthorised as a recognised body (where the SRA’s fining powers are limited to £25,000, save for matters relating to economic crime). Therefore, in some instances, the reauthorisation process will result in lower internal fining powers being available.

It is also important to note that CILEX’s fining powers are limited to CILEX members along with authorised bodies, approved managers and CILEX practitioners. It cannot fine individual employees of CILEX-authorised bodies (unless they fall into one of these categories). In contrast, in SRA-authorised firms, non-authorised employees (such as a finance assistant) can be fined, provided they are not a self-employed consultant (following SRA v Arslan [2016] EWHC 2862 (Admin)). As such, reauthorisation as a recognised or licensed body will result in employees of CILEX-authorised firms falling within the SRA’s financial penalties regime.

Undertakings v conditions

The draft enforcement strategy that accompanied the SRA’s August 2023 consultation also envisages undertakings being available against authorised CILEX members. These are an alternative to conditions being imposed on their practising rights certificates, and represent an interesting development, as historically there has been a reluctance on the SRA’s part to accept undertakings in lieu of conditions. This follows Mr Justice Eady’s comments in Bryant v SRA [2012] EWHC 1475 (Admin), in which he said (at paragraph 25): “There is no evidence that there has been any established practice in the past of the SRA accepting undertakings in lieu of conditions. What is more, that is hardly surprising in view of the long-established practice of imposing conditions in circumstances such as these and of the statutory basis for doing so.”

This approach may reopen this debate and the possibility of solicitors seeking to agree undertakings with the SRA instead of conditions.

New membership framework

In August 2023, CILEX launched a consultation, Enhancing consumer trust and confidence. While this sought views on the proposed redelegation, it also put forward a new membership framework, introducing the concept of chartered paralegals (to distinguish more experienced paralegals) and chartered lawyer titles. Following the consultation. CILEX amended its charter and byelaws, and these changes were approved by the Privy Council in May 2025. This now enables CILEX to introduce the chartered lawyer and chartered paralegal titles (although it has not yet implemented these).

To some extent, the use of chartered lawyer titles is not new, as certain categories of fellows have been able to call themselves CILEX lawyers since 2021 (with the introduction of the CILEX Professional Qualification). However, under the proposals, this will become a chartered title and will also include their area of specialism. For example, a fellow with practising rights in probate will be called a chartered probate lawyer; and if they have practising rights in conveyancing, they will be called a chartered property lawyer.

Fellows practising in non-reserved areas will also be able to distinguish themselves in the same way – for example, as a chartered lawyer (employment) or a chartered lawyer (corporate). The consultation also introduced the titles of trainee lawyer and student lawyer.

In terms of conveying this information to clients, the SRA CILEX Code of Conduct requires CILEX members to explain:

• their professional status (which, based on the above, is anticipated to change shortly)
• the areas of law in which they have the right to practise
• whether they are an authorised CILEX member, and
• how (rather than whether) they are regulated by the SRA.

These obligations are more onerous than those in the existing CILEX Code of Conduct and, if implemented, it will be important that these requirements are incorporated into engagement letters.

Conclusions

Should the redelegation occur, the SRA will increase its regulatory remit over the legal profession. However, questions remain as to whether further expansion of its regulatory reach may be appropriate at this time, especially in view of the criticisms and failings identified in the Axiom Ince report (which has led to the LSB issuing binding directions on the SRA) and the LSB’s March 2025 Regulatory performance assessment, which found shortcomings in the SRA’s authorisation, supervision and enforcement processes.

What is certain, however, is that if the redelegation occurs, it will introduce a raft of changes for CILEX members and entities, including a new authorisation process, fundamental changes to their code of conduct, and additional regulatory obligations under the SRA Transparency Rules (which are more onerous than the CILEX equivalent) and the SRA Overseas and Cross-border Practice Rules (which will apply to authorised CILEX members).

It will be important for both CILEX entities and law firms that employ CILEX members (and the members themselves) to fully understand these changes and the new ways of working. Only time will tell whether having one regulator for the two professions will further bridge the gap between them.