In June 2018, the Solicitors Regulation Authority published phase two of its Handbook reforms and a draft of the revised Handbook itself. The existing SRA Handbook is seen as complex and not particularly user-friendly – a fact acknowledged by the Authority itself in the statement. In addition, the existing Handbook needs to be updated to reflect the changes and challenges in the legal sector.
There is not expected to be a great deal of amendments to the proposed changes to be introduced. Consultations on the new Handbook closed in December 2017, so the SRA have been considering the responses for the past six months. Firms can now start to prepare for the new rules, which are expected to be in place by April 2019.
The consultation for the SRA Handbook 2019 ran in parallel with the Looking to the future: better information, more choice consultation. This initiative is designed to increase transparency overall in the legal market, making it easier for the public to access solicitors and for legal professionals to do business. Changes to the SRA Handbook are part of this overall programme, as are changes to the Accounts Rules.
Why did the SRA decide to change the SRA Handbook?
The SRA states it is committed to maintaining high standards within the legal profession and ensuring public confidence in solicitors endures. According to the Authority:
“We also need to make sure that our Principles, Codes and rules set out clearly the high professional standards we expect of solicitors and firms.
Our Handbook with its 30-page Code of Conduct and more than 400 pages of rules is long, complex and costly to apply.
Pages and pages of rules, which need regular updates, hinders rather than helps compliance. It creates cost and confusion rather than good practice and consumer protection”.
What are the changes contained in the SRA Handbook 2019?
The existing rules will be simplified and consolidated in the new Handbook. Recognising the rise in popularity of self-employment, solicitors will be able to provide certain services on a freelance basis, without the need to become a Recognised Sole Practitioner or work via an Authorised Body.
Freelancers will not be permitted to hire staff or hold client money, and must abide by the SRA Code of Conduct. They will also have to have three years’ experience before being permitted to go out on a freelance basis.
New sections including Transparency Rules and SRA Application Notice Review and Appeals Rules have been added. The former has been added in response to the Competition and Markets Authority’s report released in December 2016, which highlighted the lack of transparency on price, quality and service in the legal profession, which prevents SMEs from being able to choose the best option for their legal matter.
There have been significant changes to the Principles, comprising “the fundamental tenets of ethical behaviour” which has been condensed down to seven pages. The requirement to act honestly has been made a standalone Principle, as has the need to act with integrity.
The SRA Handbook 2019 divides the Code of Conduct into four parts:
- Code for Solicitors
- Registered European Lawyers
- Registered Foreign Lawyers
- Code for Firms
The first three Codes listed sets out the “standards of professionalism” expected by the SRA, whereas the Code for Firms states the “standards and business controls” that are demanded.
What are the changes to the Accounts Rules?
The new SRA Account Rules comprise of only seven pages. The overriding goal seems to be the simplification of the existing rules. The right to use a third party managed account as an alternative to a client account has also been added.
Do the sections on authorisation and assessment remain the same?
The new Handbook refers to the new Solicitors Qualifying Examination (SQE), which is expected to be introduced in 2020. When it comes to character assessment, protecting public interest and maintaining confidence in the profession are the most important considerations. In response to feedback, the SRA will adopt a ‘clearer, less rigid approach’ to character assessment, and early checks on character and suitability for aspiring solicitors will continue. This is so any factors which could affect their admission are brought to light early in the process.
What changes have been made to the regulatory and disciplinary rules in the new SRA Handbook?
Currently, three conditions must be met before the SRA can deliver written censure and/or a financial penalty:
1. The behaviour falls into one of nine categories, which describe serious actions such as misleading clients;
2. The issuing of a rebuke and/or financial penalty would be proportionate to the public interest, and;
3. The action (or inaction) was not “trivial or justifiably inadvertent”.
The focus in the new Handbook is on the impact the behaviour has rather than describing the behaviour. A financial penalty may be issued to:
1. Remove a financial benefit gained from the act or omission;
2. Maintain professional standards, or
3. Ensure public confidence in the legal profession.
The requirements placed on firms and practitioners are relatively similar in the new SRA Handbook 2019. The advantages are they are more simplified, and the ways solicitors can practice has been brought into line with modern work practices. However, the SRA must make a cultural change to compliment the new Handbook, ensuring it reacts proportionately and recognises the difference between a genuine mistake and behaviour that constitutes a lack of honesty or integrity.
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