Authors:Vicky Ling
Last updated:2023-11-09
Changes to the SRA Handbook
Louise Heath
How could the new SRA Handbook affect legal aid practitioners?
The Solicitors Regulation Authority (SRA) has issued a series of consultations over recent years on the new Handbook. The SRA Board intends to sign off the final version this month (July), following which it will go to the Legal Services Board for approval. If approval is granted, the new Handbook could be published this autumn. The current plan is to bring the new Handbook into effect in April 2019, although it is possible that this could slip.
The main changes will be that the Handbook is much shorter, with less detail, removing the indicative behaviours in the current code of conduct altogether. This will probably mean more emphasis on the principles, which would be reduced in number.
Two codes of conduct
It is intended that there will be two codes of conduct, one applicable to regulated organisations and the other to individuals. The SRA has tried to focus on how individuals should behave in the context of practice. In the regulated organisation code, the emphasis is on management issues and the need for policies, systems and procedures. There are overlaps in areas such as conflicts, confidentiality, referral arrangements and client care, which are included in both versions.
Freelance solicitors
One of the SRA’s key proposals is to allow solicitors to practise freelance, in a similar way to barristers, described by the SRA as the ‘Uberisation’ of legal services. This would allow solicitors to provide legal advice (although not reserved activities) through unregulated entities. The SRA’s view is that under the current regime, non-lawyers, who are unregulated, can provide legal advice (as long as they do not offer reserved activities) in unregulated entities; but (with the exception of Law Centres and similar not-for-profits) solicitors cannot. It believes its proposals would allow more people to access legal advice from qualified lawyers.
The SRA had intended that solicitors’ clients outside regulated organisations would not be able to make a claim to the compensation fund. This was controversial and was opposed by the Law Society and some consumer groups because of the lack of clear routes for redress. The SRA has listened to these concerns and confirmed such solicitors will need ‘adequate and appropriate’ insurance. Clients will be able to claim on the compensation fund.1Looking to the future: phase two of our handbook reforms. Our post consultation position, SRA, June 2018. See also:
Minimum years of qualification
A further controversial proposal was to drop the ‘qualified to supervise’ three-year rule. Solicitors will continue to need three years’ practice experience before being able to operate independently.
Professional indemnity insurance
At present, the required minimum for firms is £2m of cover. ‘Special bodies’ such as Law Centres need to have professional indemnity insurance ‘reasonably equivalent’ to the minimum for firms. In practice it has been difficult to persuade the SRA to accept less than £2m in cover even for Law Centres with a low risk profile. The Law Centres Network has been in discussion with the SRA about changing the wording to allow more flexibility. The SRA will be changing it to ‘adequate and appropriate’ to allow this flexibility.
Accounts rules
The consultation proposes broad changes to the Accounts Rules by significantly shortening them and focusing on their core purpose of keeping client money safe. The SRA’s aims are to:
simplify the Accounts Rules by removing prescriptive rules and requirements;
change the definition of client money; and
provide an alternative to holding client money by allowing firms to use third party managed accounts.
The SRA’s proposed new code would not allow solicitors working in unregulated entities to hold client money in future but it is aware that solicitors in ‘special bodies’ have done so for many years.
It intends to change the definition of client money that must be held in a client account. Client money is to include all monies paid in advance for fees and disbursements before a bill has been issued. It has provided an exemption so that where the only client money that is received is advance payments for fees and unpaid disbursements for which ‘the firm’ (sic) is liable, that money does not have to be held in a client account. This means ‘firms’ that only handle these types of client money would not need to operate a client account. The SRA intends to introduce a rule exempting payments from the Legal Aid Agency from being held in a client account.