In-house lawyers to face tricky ABS decision

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By Legal Futures

18 May 2012


Collins: SRA will look to help in-house lawyers trying to decide on application of section

The Solicitors Regulation Authority (SRA) is to push ahead with changes to the SRA Handbook that will leave it to in-house lawyers to decide whether the law requires that their legal teams become alternative business structures (ABSs).

The SRA is to end transitional arrangements put in place to give it breathing space to consider this thorny issue, meaning that organisations whose in-house solicitors provide reserved legal activities to people other than their employer – such as insurers, associations and local authorities – will need first to consider whether section 15(4) of the Legal Services Act 2007 requires them to become an ABS.

Section 15(4) says in-house lawyers offering reserved legal activities to “the public or a section of the public” must do so from an ABS.

The SRA board was told on Wednesday that most of the 48 respondents to a consultation on the issue backed the approach, but those who did not felt it “put overly onerous obligations on lawyers and did not assist in clarifying how the Act will apply to in-house practitioners”. The Law Society was among those to express concern.

A number of responses highlighted that local government lawyers have particular issues in dealing with the application of section 15, “particularly in view of the developing legislation specifically affecting local government responsibilities”.

SRA executive director Richard Collins told the board while some respondents wanted more clarity on how to judge whether an in-house lawyer is advising the public or a section of it, this would be an “impossible task” given how fact-specific each assessment would be. However, he said the SRA would seek to help individual organisations which are trying to work it out.

The changes – which have to be approved by the Legal Services Board for inclusion in the next edition of the SRA Handbook next month – also involve a small liberalisation that will allow those working for associations to provide reserved legal services to members (subject to section 15(4)).

Mr Collins said the consultation responses also raised a series of issues more generally about the regulation of in-house lawyers, which he said will be dealt with in a broad review of in-house practice later this year.

  • The SRA’s proposal to delay the introduction of the COLP and COFA regime to 1 January 2013, as reported on Wednesday, was approved by the board on the nod.

 

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