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Tesco Law at last? SRA rules could herald “new breed of MDP”

Tesco: S&R offer opportunity to marry legal and retail services

The new rulebook for solicitors may lead to a “new breed” of multi-disciplinary practices (MDPs) emerging that integrate legal services with a very wide range of services for individuals, one of its architects has predicted.

Crispin Passmore, former strategy director at the Solicitors Regulation Authority (SRA), also forecast that in future more firms could face regulatory action in future, instead of the current focus on individuals.

The SRA announced last month [1] that its new Standards & Regulations (S&R) would come into force on 25 November. The 130-page rulebook includes two short codes of conduct for firms and individuals respectively.

Writing on his website [2], Mr Passmore – who is now a consultant – said the most significant new freedom was probably that solicitors could deliver non-reserved legal services to the public from unregulated businesses.

He said: “That, of course, already happens on the margins across the legal market. Law centres are not regulated entities, for example, and the current rule 4 of the Practice Framework Rules allows a significant range of other narrow get-outs.

“But the new approach really does mean that will-writing businesses, business advisers, HR and employment advisory firms, and, yes, even Tesco or Amazon, can employ solicitors to advise their clients.

“We might see the development of a new breed of MDPs that are not focused on professional services but on integrating legal services with other business services and with other retail services for individuals.

“There are already many beginning to emerge across the legal market.”

This was, Mr Passmore said, great news for solicitors, who would have more employment opportunities, especially when combined with “the opening up of qualification” coming with the Solicitors Qualifying Examination.

“An existing outsourcing business, managed service provider or MDP now has more opportunities and greater flexibility about how they integrate legal services directly into their business.

“Structurally they can choose more options and work in a way that suits them and their clients (so long as the standards set out in the relevant codes are adhered to) rather than being hamstrung by regulatory prescriptiveness and protectionism.

“Existing law firms have similar opportunities to rethink their offering.

“In my view, in ten years’ time we will see this as a more significant change than even ABS. I predict more solicitors delivering more services to more clients of all sorts.”

He suggested that the opportunity under the new rules for solicitors to work as freelancers would be “a slow burn change that will gradually gain significance”.

Mr Passmore explained: “It matters because it means that an individual solicitor will be able to deliver the full range of legal services – including litigation, advocacy and other reserved activities, outside of a regulated law firm.

“This will, initially at least, be attractive to the many solicitors that have left the legal labour market to have children, care for them or others, or just want to work more flexibly. We may well see the flexible lawyer offers grow and attract more lawyers offering even more flexible services.

“Rather than be predominantly an overflow stack for law firms or in house teams, we might see more managed services and the gradual erosion of in house teams as we currently conceive of them.”

He suggested that freelancers may also be used more in the retail legal market, “working alongside solicitors in unregulated business for example, or alongside tech-driven business”.

Mr Passmore also urged solicitors to get a jump on the competition by using the SRA innovation space – which offers waivers from certain rules for firms looking to innovate – before the S&R actually come into force.

We recently reported on the latest unregulated businesses to receive waivers [3].

He emphasised that the reforms were not cosmetic and that law firms leaders needed to wake up to them.

“[They] offer an entirely different regulatory model based on flexibility and freedom to deliver competitive legal services in entirely new ways.”

He said the shift to separate codes made it much clearer for the law firm, its management team and COLP to know what was expected of them.

“My expectation is that we will see an increase in the coming years of regulatory action taken against firms (as opposed to just individual solicitors) for the business’s failures of oversight, systems, controls and culture.

“Law firms really need to be thinking about their governance, risk management and culture… Firms need to think about their ethical infrastructure. This is a big shift away from compliance and towards risk management and personal professional responsibility. That means more flexibility, and more freedom.”