Solicitors must “comply or die”, says new LexisNexis white paper
A white paper published by LexisNexis says that solicitors must “comply or die” as the Solicitor Regulatory Authority’s (SRA) new rules come into force. The rules mean that all firms must, from 1 January 2013, have formal compliance officers – a compliance officer for legal practice (COLP) and a compliance officer for finance and administration (COFA).
The paper argues that a disproportionate burden will fall on solo and small law firms. It points out that the last few years have been a huge challenge for smaller firms just to keep their heads above water in the most difficult market conditions the legal sector has faced for decades: an entrenched double-dip recession combined with legal aid cuts, the forthcoming personal injury referral fee ban, civil costs reforms, professional indemnity insurance pressures, plus new competition from within and outside the traditional legal market. At the same time, the regulatory challenge has risen year on year.
Allison Wooddisse, author of the report and LexisPSL head of practice compliance, explained: “Sole practitioners, independent lawyers or owners of a smaller law firm, are the triathletes of the legal world. The long-term success or failure of their firm depends on how they perform in three distinct disciplines: delivering quality legal services, effective business management and regulatory compliance.”
The paper explains that the cost of compliance falls disproportionately heavily on sole practitioners and smaller firms. The SRA exercises its powers in a proportionate manner, focusing on risk and outcomes for clients – but it doesn’t work the other way around. Firms are not allowed to take a risk-based approach to complying with the SRA Handbook. Smaller firms have to comply with everything that applies to much larger firms, but with a fraction of the resources.
Allison Wooddisse added: “Most triathletes have their favourite events: delivering a quality legal service is probably the part that many owner-lawyers enjoy the most. Running a business autonomously is also a major attraction, but that’s not to say it’s easy: generating work, sorting out premises and insurance, maintaining a good relationship with the bank, making sure the website is up to date, navigating HR issues, dealing with the photocopying man, deciding on a brand… the list goes on.
“With all that, solicitors could do without the added and constantly shifting burden of compliance.”
The SRA Handbook is 500 pages long with a raft of rules, regulations and legislation that apply to all businesses. The paper points out that firms that do conveyancing work also need to achieve membership of the Conveyancing Quality Scheme, while for those that do publicly funded work, it’s the Specialist Quality Mark. Alternatively, there may be external pressures to achieve Lexcel accreditation.
The report can be accessed here, and visit the Business of Law blog here.
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