Blog Post

What should the SRA be thinking about right now?

Crispin Passmore • Mar 23, 2020

Is the SRA doing enough to respond to the virus?

There is almost no part of our economy that is not affected by the current health crisis. The reduction in demand for those at the front line of day to day consumption will rush through the economy in the next three to six months and some are predicting not just a recession but a drop of some 10% or even 20% in economic activity. There will be a reshaping of our economy and society in ways that we can predict and other ways that we are yet to recognise. Businesses are already innovating just to generate some revenue and that will lead to new processes, products, services and channels. Law firms and legal businesses are in the same situation as other businesses.

We are witnessing unprecedented Government intervention into the economy and it is right that we look at others who shape markets to see if they are doing all that they can to support the economy through this. What should regulators be thinking about and doing right now?

So far, we have seen little from legal regulators. The BSB has cancelled centralised assessments for student barristers. The SRA has held firm on the assessment of law degrees and LPCs. Steven Vaughan has written about that decision and it does seem that the SRA has not quite grasped the scale of the challenge. I never thought the law degree mattered that much - and neither it seems do city firms, given that about half their trainees do not have one – so it is hard to think that it is a crucial element of assuring standards. Many of these undergraduates will end up sitting SQE, so it seems even more of an odd decision by the SRA. The SRA seems to me to have been silent on the key issue facing us all and its usual routine of communications seems to be carrying on unaffected - no wonder some have called it tone deaf.

Beyond the immediate challenge of examinations there are pressing issues which the market needs assistance with. Firms are moving to remote working, without the usual project planning and risk assessment that would accompany such changes. Compliance officers are working through information security in a different world. Heads of Department are having to learn to supervise remotely. Trainees need the same day to day guidance as ever but that now comes through sharing an office via Zoom or Skype. The finance director is thinking through whether the indemnity insurance covers the new ways of working. And the marketing manager is trying to work out how to reach new customers, understand what they need and how to ensure the firm is delivering that. What could the SRA be doing to help, or should it just leave this to the market: those firms that adapt best will survive and even thrive?

Coming at this with a history of pushing market based regulation, I see SRA liberal and de-regulatory approach to regulation as entirely consistent with intervention in current circumstances. In setting out its approach to regulation in the 2015 Policy Statement, the Chair of the SRA said: ‘Our approach to regulation and its specific application must continue to evolve to remain appropriate and relevant to the market and wider environment within which we operate’. If ever there might be a time for staying appropriate and relevant this is it.

Furthermore, in that same document the SRA boldly states that ‘if those [regulatory] arrangements are very onerous and costly to suppliers, because of the very high levels of protection they provide, and firms cannot obtain or afford to be covered, there might be a reduction in the number of firms; impacting negatively on access to justice, diversity and competition (all regulatory objectives in their own rights).’ If we apply this to the current crisis it seems that the SRA urgently needs to test whether any of its requirements or expectations are putting an unbearable burden on law firms to the extent that they might damage supply. Or does the SRA see this as simply not the business of a regulator – in effect leaving this as a period of creative destruction?

There is no need for the SRA to give solicitors a free pass. But as we head towards a new indemnity insurance year, should they be relaxing the hugely expensive and inflexible minimum terms and conditions? They might be clear about their approach to confidentiality and data protection risks and subsequent approach to enforcement where remote working is a response to this health crisis, learning from the ICO. They might think about what returns and information are required from law firms and solicitors over the next six months, in the same way that the FCA has for results over the next two weeks. The SRA might offer guidance to supervisors, trainees and apprentices about effective supervision under forced remote working, like BACP. Perhaps it will even get to the point of financing much of the next practice fee and 2020/21 budget through reserves, rather than sucking cash out of the market at this point. 

A truly market approach tackles real risks. There is little point in upholding and enforcing standards designed for a different world if the effect is the collapse of supply to people when they are most likely to need legal advice and assistance. There is no need to prop up particular business models – those firms that have the strongest balance sheet, most robust cash flows and smartest delivery mechanisms for this changed world will no doubt respond best over the next two years. The SRA is a good organisation with great people, but right now it has to make sure it is not pouring oil on to fires. It might even stand with law firms as they struggle for survival.

A fabulous brutalist building in Miami
By Crispin Passmore 12 Dec, 2023
The Legal Tech Fund ran the best event for innovators int he legal market that I have found. TLTF 2023 was a a great opportunity to learn new things but best of all were the connections made and friends seen. These enabled new discussions and deeper debates about technology, capital deployment and liberalisation. TLTF 2024 is just one year away - I'm already excited.
By Crispin Passmore 11 Sep, 2023
A guest blog from the team @ Innovation for Justice - t he nation’s first and only cross-discipline, cross-institution, and cross-jurisdiction legal innovation lab
one more lovely brutalist building - Golden Lane Estate, London
By Crispin Passmore 31 Aug, 2023
What does it mean for law firms?
By Crispin Passmore 04 Aug, 2023
Lawyers: don't hold your breath waiting for more regulation 
A nice brutalist building in New Zealand
By Crispin Passmore 09 Mar, 2023
New Zealand Law Society takes a step towards major reform 
Yet another brutalist building - picture provided by Unsplash
By Crispin Passmore 25 Jan, 2023
Integration of alternative providers and regulated law
Crispin skydiving
By Crispin Passmore 10 Jan, 2023
I am fundraising for Law Centres. Please sponsor me. A lot.
By Tom Gordon 29 Aug, 2022
A guest blog from Executive Director of Responsive Law
Damar Training logo
By Jonathan Bourne - Damar Training 22 Aug, 2022
Towards a more diverse, inclusive, healthy and successful legal sector
A beautiful (though leaking) court build in Plymouth
By Crispin Passmore 01 Aug, 2022
CILEX plans to shift regulation of legal executives to the SRA
More Posts
Share by: