The Solicitors Regulation Authority is consulting on major changes to the SRA Handbook. Law Society chief executive Catherine Dixon outlines the risks the proposals present to the legal profession and to clients
Clients getting legal advice from solicitors have long been able to rely on communications with their solicitor being subject to legal professional privilege, which is a cornerstone of our justice system. They also know that solicitors have full insurance, so, in the unlikely event that things go wrong, they can get financial redress.
These certainties, among others, are now at risk because of proposals from the Solicitors Regulation Authority (SRA) which, if adopted, could leave clients exposed and deprived of vital protections. Solicitors from all over the country are also gravely concerned about the SRA proposals, as they fear that the reputation and standing of solicitors will be tarnished if these changes go ahead – and they could result in two tiers of solicitors.
Why two tiers ?
On the one hand, the solicitors who work in regulated entities, alternative business structures and in-house will continue to provide full client protection (with the exception of in-house) including professional indemnity insurance, and full recourse through the Legal Ombudsman and the compensation fund, thereby offering clear redress in the event things go wrong. They will also be subject to regulatory rules on conflict. The advice these solicitors give will be subject to legal professional privilege, which means that clients can speak confidentially to their solicitor without the risk that they or the solicitor will be forced to disclose the conversation or correspondence passing between them.
However, on the other hand, advice to the public from solicitors in unregulated organisations may not be legally privileged, which would undermine this vital client protection. These solicitors will not be obliged to have professional indemnity cover, nor will they be subject to regulatory rules on conflict, though common law rules will apply, which means that different conflict rules will apply depending on where the solicitor works. Their clients won’t be able to access the compensation fund, and it is unclear whether they will be able to seek redress from the Legal Ombudsman, because of disclosure rules which won’t apply to the unregulated organisations. The bottom line is that their clients may have little protection compared to clients of solicitors working in regulated entities.
All this means that clients purchasing legal services simply won’t know what protection they are getting and, ultimately, this will shake confidence and affect the standing of the solicitor profession at home and abroad.
The SRA is also consulting on changes to the SRA Accounts Rules which, among other matters, could mean that all fees, including disbursements, for which the solicitor is liable, will be treated as the firm’s money. This shifts the risk from the solicitor to the client, and weakens client protection in the event of insolvency which could result in reputational damage to the profession.
During the past few weeks – and in the weeks to come – the Law Society has been organising meetings with solicitors so we can get direct feedback on what they think about the SRA plans.
We have produced a briefing designed to help our members to consider the implications of the proposed changes. We are calling on all solicitors to respond to the consultation by the SRA’s deadline of 21 September and to provide your views on the proposals to the Law Society.