So at last we know the date that the SRA’s new Standards and
Regulations (STARs) will come into force to replace the unwieldy 2011 Handbook:
25 November 2019. It will frustrate many solicitors and legal business that the
wait is so long but I think that frustration is misplaced. With imagination
there is no need to wait to innovate and deliver services differently now.
I suspect many other solicitors and all firms haven’t turned
their minds to this, are vague on the changes and thinking they ought to ask
their COLP to check what processes need to change. That rather misses the
point: the changes are not cosmetic. The new STARs offer an entirely different
regulatory model based on flexibility and freedom to deliver competitive legal
services in entirely new ways.
So let’s just remind ourselves what the new STARs offers
solicitors, law firms and legal businesses before thinking about what needs to
happen today.
Shorter and less
prescriptive
The new rule book is just 130 pages long and it has been
reorganised into a simpler structure.
There is a Code of Conduct for Solicitors, RELs and RFLs that sets the
high professional standards that are expected by the public and professional
peers and enforced by the SRA. There is a similar Code of Conduct for Law Firms
that establishes the standards of business conduct and culture for regulated
firms – ie those that are authorised to deliver reserved activities.
The Code for individuals applies wherever and however you
practice. It is good for the public to know that that every solicitor is held
to the same professional standards regardless so practising in in a high street
law firm, a regional firm focused on commercial clients, a city or
international law firm, an MDP or an ABS, an in-house solicitor or a solicitor
in a charity or an unregulated business.
The shift to separate codes will mean that is much clearer
for the law firm, its management team and COLP
to be clear about what is expected of the as a firm as well as
individual solicitors. My expectation is that we will see an increase in the
coming years of regulatory action taken against firms (as opposed to just
individual solicitors) for the business’s
failures of oversight, systems, controls and culture. Law firms really need to
be thinking about their governance, risk management and culture – an issue I
will return to in a later blog drawing not only on my experience at the SRA but
also as a Chair of two very significant Audit and Risk Committees outside of
the legal sector.
The other key changes in structure are things like the
individual and firm authorisation rules, single decision making and appeals
rules and shorter (and much clearer) accounts rules. The outcomes and
indicative behaviours are gone. Individual solicitors just need to focus on the
Codes of Conduct and take ownership fo their open ethical behaviour. Firms need
to think about their ethical infrastructure. This is a big shift away from
compliance and towards risk management and personal professional
responsibility. That means more flexibility, and more freedom.
Solicitors in
unregulated firms
Perhaps the most significant new freedom is that the new
STARs allow solicitors to deliver non-reserved legal services to the public
from an unregulated business. That of
course already happens on the margins across the legal market. Law Centres are
not regulated entities for example and the current rule 4 of the Practice
Framework Rules allows a significant range of other narrow get outs. But the
new approach really does mean that will writing businesses, business advisers,
HR and employment advisory firms, and, yes, even Tesco or Amazon, can employ
solicitors to advise their clients. We might see the development of a new breed
of MDPs that are not focused on professional services but on integrating legal
services with other business services and with other retail services for
individuals. There are already many beginning to emerge across the legal
market.
This is great news for solicitors. Suddenly they will be
able to work for many more businesses. Put it alongside the opening up of
qualification that comes with SQE and we can see the numbers and opportunities
for solicitors flourishing over the next ten years.
An existing outsourcing business, managed service provider
or MDP now has more opportunities and greater flexibility about how they
integrate legal services directly into their business. Structurally they can
choose more options and work in a way that suits them and their clients (so
long as the standards set out in the relevant codes are adhered to) rather than
being hamstrung by regulatory prescriptiveness and protectionism. Existing law
firms have similar opportunities to rethink their offering.
In my view, in ten years time we will see this as a more
significant change than even ABS. I predict more solicitors delivering more
services to more clients of all sorts.
Freelancers
The opportunity for solicitors to work as freelancers is
perhaps a slow burn change that will gradually gain significance. It matters
because it means that an individual solicitor will be able to deliver the full range
of legal services – including litigation, advocacy and other reserved
activities, outside of a regulated law firm.
This will, initially at least, be attractive to the many
solicitors that have left the legal labour market to have children, care for them
or others, or just want to work more flexibly. We may well see the flexible
lawyer offers grow and attract more lawyers offering even more flexible
services. Rather than be predominantly an overflow stack for law firms or in
house teams, we might see more managed services and the gradual erosion of in
house teams as we currently conceive of them.
It will take time but I am already talking about these
opportunities with some of the more innovative business in the legal market.
We may also see more use of freelancers in the retail legal
market, working along side solicitors in unregulated business for example, or
along side tech driven business.
Why wait for 25
November?
Lets focus on the question of what to do today? Can
solicitors, law firms and other legal business just sit back and wait for 25
November? Do they need to plan now for making changes on that date? I’d say
move faster, think quicker and analyse the opportunities now.
The SRA runs its SRA innovate service. Waivers are available
now and it would be odd for the SRA to not allow someone to work in the ways
above immediately (via waivers) if they can show they are doing so
appropriately. That needs careful thinking but, while first mover advantage has
already been handed to the firms that have done this, there is no time like
today to decide to think about the new STARs as a business strategy issue
rather than a compliance issue for your COLP.
