Law Society lashes SRA over “new Wild West” of legal regulation

Egan: Regulation is a blunt instrument

The Law Society has hit out at the latest raft of reforms proposed yesterday by the Solicitors Regulation Authority (SRA) and particularly the idea of granting ‘freelance’ solicitors the ability to deliver reserved legal services without being either a registered sole practitioner or part of a law firm.

Combined with the SRA’s earlier plan to allow solicitors to practise from unauthorised businesses, also bitterly opposed by Chancery Lane, it said the regulator risked exchanging public trust in solicitors “for a new Wild West”.

“We are gravely concerned the SRA is ploughing ahead with proposals that would see solicitors subject to entirely different regulations depending on where they practise.

“The regulator has failed to think through the implications for consumer protection nor has it proposed adequate safeguards.”

Freelance solicitors would be required to carry indemnity insurance and not have a client account except to hold fees and disbursements.

Society president Joe Egan also complained that the SRA’s plan to remove the rule that requires solicitors to wait three years before setting up their own firm “could put vulnerable clients with complex legal problems in the hands of inexperienced, unsupervised lawyers”.

He was similarly unhappy with the SRA’s other consultation, also published yesterday, on what firms should have to publish by way of information on pricing, service and regulatory matters.

He said: “Regulation is a blunt instrument. Publishing a raft of information without proper context may cause confusion and not actually help consumers understand legal services.”

The SRA conceded that unregulated firms could not be forced to publish anything. “It seems counter-intuitive that consumers should have less information about solicitors operating away from the protections of regulation,” Mr Egan said.

The Law Society continued its attack on the SRA in its response to the regulator’s consultation on its business plan.

It cautioned there was a danger that much of the uncertainty facing solicitors and firms “is being driven by the actions of the regulator and the cumulative impact on the profession is not being assessed”.

The response explained: “There is a risk that constant regulatory change has an economic impact, as firms and solicitors adjust to and implement new requirements.

“Before introducing further changes, we would encourage the SRA to consider not just the individual impact of a new proposal on a firm or solicitor, but the cumulative impact of all the changes that firms and solicitors have to deal with.”

It also accused some of the SRA’s recent initiatives – such as allowing solicitors to practise from unauthorised firms – for placing “the pursuit of deregulation ahead of ensuring client protection”.

That reform also risked undermining the profession’s trust in the regulator, the society said.

“In terms of policy changes, this trust will come if the profession can see that the regulator is listening to the responses that are submitted to consultations. We do not expect that the SRA will always agree with the views of the profession.

“However, it is reasonable to expect a degree of modification in the face of consistent and widespread feedback from stakeholders. At times (for example on the proposal to allow solicitors to deliver non-reserved services in unregulated entities), our members have felt that their views and evidence have been dismissed by the SRA.

“We would also ask that the SRA make its decision-making processes as transparent as is possible in order to engender trust.”

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