The Law Society has blasted Solicitors Regulation Authority (SRA) plans to allow solicitors to practise from unregulated businesses, saying they risk creating a two-tier profession and eroding the standing of the profession.
Issuing its initial response to the regulator’s radical proposals to rewrite the SRA Handbook, Chancery Lane said they would also leave clients with less protection.
Chief executive Catherine Dixon said allowing solicitors to work for unregulated entities providing unreserved legal activities to the public has “serious implications for client protection, legal professional privilege, professional supervision, competition and the standing of the solicitor profession.
“The proposals could result in two tiers of solicitors – those working in a regulated entity and those who are not – with different rules and protections applying to clients depending on where the solicitor is working.”
She warned that advice from solicitors in unregulated entities may not be legally privileged – which the SRA accepts – and said this could be the start of “a slippery slope which could erode legal privilege, a cornerstone of the justice system, and undermine the standing of the solicitor profession both at home and abroad”.
Ms Dixon continued: “Also, solicitors working in unregulated entities may not be required to have professional indemnity insurance and may not be subject to the same conflict rules. Their clients may not have access to the compensation fund or the Legal Ombudsman.
“We are concerned that this will put clients at risk as they simply won’t know what protection they are getting when they instruct a solicitor.”
Extra risks would be created by changes to supervision requirements that mean newly qualified solicitors could set up their own unregulated firms, she said.
“Newly qualified solicitors generally welcome the support and guidance from more experienced solicitors. If that’s not available it could place clients at risk as well as risking the standing of the solicitor profession.
“Also because the regulatory burden on solicitors working in regulated entities will be higher than on those who are not, this could result in unfair competition between providers of legal services which is not in the public interest.”
The society released the comments in a bid to seek solicitors’ views that it will feed into its response to the SRA’s consultation, which closes on 21 September.
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