The Law Society v The SRA

Fresh Attempt To Strengthen Client Protection Concerning Freelance Solicitors.

The Law Society has recently asked the Legal Services Board (LSB) to impose extra requirements on solicitors who may otherwise be free to offer legal services without insurance in the employment of an unregulated business.

Although the LSB has effectively approved the reforms, they can be amended.

The Law Society’s President, Christina Blacklaws, in a letter to the LSB, stated:

“Freelance solicitors (or at least those providing reserved services) are required to purchase “adequate and appropriate” PII, but the SRA has not provided sufficiently clear explanations of what they mean by the term. Without a robust definition, enforcement action against freelance solicitors for not obtaining the expected level of cover will prove problematic.”

The Legal Services Consumer Panel has also attacked the SRA regarding its policy on freelance solicitors and Public Indemnity Insurance (PII).

Writing to the LSB, panel chair, Sarah Chambers stated ‘patchy’ cover would lower consumer protection and exacerbate confusion.The Law Society v The SRA

“There is simply no rationale for this inconsistent treatment of unreserved legal activities by solicitors depending on whether they undertake reserved activities.

We know that consumers have very little awareness of the difference between regulated and unregulated providers, let alone the varying protections that come with different service providers. It is therefore unrealistic to expect consumers to comprehend new permutations amongst solicitors, let alone the minute but potentially significant details around the varying protections that come with each type of solicitor.”

Why has the SRA provided ambiguous requirements regarding freelance Solicitors’ PII?

The SRA has stated that one of its motivations for the upcoming reforms is to widen access to justice.

In March 2019, chair Anna Bradley said:

“By stripping away outdated and unnecessary rules and giving solicitors more flexibility to design and deliver their services around their clients, our new regulations are designed to help people access a wide range of high-quality services with the confidence that proper protections are in place.”

Where solicitors work on a freelance basis, they will not be able to hold client money. They must hold “adequate and appropriate” PII, but “adequate and appropriate” has not been defined. Solicitors working in an unregulated business are required to purchase PII only if they are providing legal services.

The SRA states that such reforms not only remove the regulatory burden on legal professionals; they can use their professional judgment when it comes to meeting required standards.

Concerns surrounding the reforms

Apart from the concerns around consumer protection, there is also apprehension about whether insurers will choose to insure freelance solicitors. Commentators state that insurers do not understand the new model, and most are unprepared to support it. This leaves younger solicitors exposed to considerable risk should their PII fail to respond.

Changes deferred to November

The SRA announced in March 2019 that reforms to the way solicitors are regulated would be delayed until November 2019. They were expected to come in during the Spring.

Ms Bradley said the revised date was a sensible move to give everyone – regulators and the regulated community – the chance to amend its methods.

In summary

The reforms being ushered in by the SRA will radically change the way the legal profession is structured. With any type of deregulation, there are concerns regarding consumer protection – the financial sector is a prime example. However, the way people are working is changing. Studies show that half of all workers expect to be freelance by 2020. Not only can freelancers earn more than regular employees, but research show they value flexibility (79%), being able to work on projects they believe in (42%) and the ability to keep work exciting (30%).

The digital revolution has changed the way we live and work. The SRA, to its credit, is responding to this change. However, it is vital that the clients’ best interests are protected. People see a solicitor because they often have a problem which, if not solved correctly, could cause lasting financial and reputational damage. Consumers of legal services need to know there is some form of regulation governing those giving such critical advice.

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