Does the SRA practise what it preaches over OFR?
Posted by Dan Bindman, associate editor, Legal Futures
The good old days before OFR
An outcomes-focused, risk-based approach to regulating the activities of most lawyers who deliver legal services in a post-Legal Services Act landscape is a fact of life. Yet you still don’t have to go far to find solicitors who either fail to grasp the concept or hanker after the old, detailed rules-based system.
The degree of non-acceptance is profound, more than a year after outcomes-focused regulation (OFR) came in – in October 2011. So persistent is it that the SRA may be relying on the insertion of compliance officers for legal practice and financial administration (COLPs and COFAs) into the fabric of every firm to help change attitudes.
It may privately hope that these COLPs and COFAs, whose duties fix them awkwardly in a no-man’s land between their firm and its regulator, will help ease the fears of sceptical solicitors. At very least, their responsibilities to ensure compliance will mean they are up to speed on the implications of OFR and will be able to pass on their knowledge.
OFR clearly has its supporters within the profession. The premise of replacing a set of prescriptive rules with a slimmed-down code of conduct, combined with a shift in responsibility for compliance to regulated individuals, has its attractions for anyone with a libertarian mindset.
It can fairly be presented as a red tape removal exercise and has an aura of ‘grown up’ devolution about it. In a legal services market in which alternative business structures compete with traditional firms, its flexibility of application surely makes sense in consumer protection terms.
Also, freeing up regulatory resources to tackle areas of high risk, a key argument in favour of OFR, should appeal to a profession keen to hold down the size of its compensation fund. This is especially true now that – as recently articulated by the SRA’s executive director Richard Collins – after years of recession many firms are “running on empty”.
So why have so many lawyers failed to buy into OFR? It is not unusual to hear solicitors express distaste for an approach that in theory should play well with professionals generally known for their dislike of regulatory ‘nannying’.
In some quarters there is outright contempt. I overheard a former appeal court judge last year saying that OFR was, in his learned view, “utterly meaningless”.
Part of the problem seems to lie in definitions. The Legal Services Board (LSB) chairman, David Edmonds, believes OFR can be neatly embodied in a phrase of lofty principle. He told a recent Bar Standards Board (BSB) meeting that having once been “hazy” himself on the concept, he now defined OFR for barristers as “the ultimate recognition of a barrister’s commitment to professional principles and high ethical standards”.
Discussions about OFR have struggled with its meaning from the start. The SRA’s first OFR consultation, launched in April 2010, caused confusion, with many respondents failing to understand ‘outcome’ at all. The SRA subsequently had to clarify: “The ‘outcomes’ in [OFR] are not about whether the client wins or loses a case. They are about the standard of the professional service delivered to the client.”
Since then the SRA has run 28 roadshows across two years, 16 consultations, and numerous webinars, seminars, media reports, lectures, group meetings and other assorted publicity measures. So if the message has not yet sunk in, the regulator can hardly be blamed for want of trying.
A tougher nut to crack, from the regulator’s point of view, is lingering suspicion within the profession that solicitors will be more vulnerable to unwarranted SRA interference without the reassuring bulk of the old 2007 Code.
At an SRA event in Birmingham last month, the depth of concern about OFR among solicitors was on show. One questioner suggested OFR gave the SRA greater opportunity to “trip up” solicitors attempting to comply with it, when compared to the old “black and white” code.
This concern harked back directly to the 2010 consultation, when solicitors who were worried about the impact of OFR – according to the SRA’s summary of responses – “emphasised the need for… [the regulator] to recognise that decisions made by firms are often made in good faith”.
The introspection then shown by top SRA officials in Birmingham revealed they are acutely aware how widespread this concern remains. Mr Collins acknowledged that he often hears people say the SRA “talks a good game” about OFR but acts quite differently. The SRA has to tackle “behaviours within our staff” as they go about implementing it, he admitted.
SRA chief executive Antony Townsend accepted that “more uncertainty” for practitioners was the consequence of OFR’s “flexibility”. But he also insisted that “it’s easy to be a bit rose-tinted spectacles about the certainty of the old code” too. He was compelled to reassure the doubters: “We are really not trying to trip people up… [or] to second guess perfectly reasonable professional decisions.”
Any solicitor who imagines the march of OFR might be slowed, or even reversed, any time soon is deluded. Even if the SRA considered the possibility, the LSB is adamant that an outcomes-focus is essential to the regulatory project and intrinsic to what being a professional is all about.
David Edmonds told the BSB, which is embarking on its own version of OFR: “I see it as vital that we go down the route of OFR if we are going to innovate and if we’re going to develop…
“It seems to me that one of the defining characteristics of a profession is that it should be able to identify the spirit and intent behind regulation and adopt the most appropriate way of meeting that in different circumstances, rather than needing rules.”
Tags: COFA, COLP, compliance officer for finance and administration, compliance officer for legal practice, OFR, outcomes-focused regulation, Solicitors Regulation Authority
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