Posted by Neil Rose, Editor, Legal Futures
[1]Open for business: SRA will vet new firms first
A key feature of outcomes-focused regulation (OFR) is that new firms will need authorisation from the Solicitors Regulation Authority (SRA) before hanging out their shingle. This will include checking the firm’s business plan – such as the business model, proposed legal services and financial projections for no fewer than five years – as well as their compliance plan.
Meanwhile, the SRA has found itself in a slightly sticky situation over its decision to close the assigned risks pool to new firms, with the SRA’s own equality impact assessment indicating that this will disproportionately affect black and minority ethnic (BME) firms (see story [2]). The Black Solicitors Network has argued vehemently that it should not have closed the pool to new firms before understanding why this is.
However, putting the BME issue to one side for a moment, few people have argued with the broad principle that if a new firm is so unappealing from day one that it cannot find insurance, then it should not be the job of the assigned risks pool – the cost of which is effectively borne by the profession through its insurers – to let them open for business anyway.
Connecting these two issues, the thought occurs that if, in a post-OFR world, all new firms have been given a clean bill of health by their regulator, there is a case for reopening the pool to them because there might be other, less good reasons that they have not been able to obtain insurance, particularly if they are BME firms. I put this thought to SRA chairman Charles Plant and chief executive Antony Townsend at Tuesday’s OFR press briefing, and although I rather got the impression that such an idea had not been put to them before, both considered reversing the decision on the pool highly unlikely. But could this not be a way out of their sticky situation?