Traditional firms “more innovative than ABSs”, says SRA, as it promises COLP/COFA reassurance


Townsend: PC renewal latecomers will be accommodated

Innovations in legal practice are coming more from traditional law firms than from alternative business structures (ABSs), the Solicitors Regulation Authority said last week.

Meanwhile, the SRA will this week clarify the position of firms that have submitted nominations for compliance officers for legal practice and financial administration but have not yet received approvals.

Speaking at the launch of the authority’s strategic plan 2013-15 at a conference in Birmingham on Friday, executive director Richard Collins said the SRA was seeing more innovation from “infinitely adaptable, resilient” traditionally-structured law firms than from ABSs. Examples of innovation include “outsourcing, offshoring, using IT in new ways” and “much closer collaboration between… traditional law firms and major suppliers of work”; for instance insurance companies.

But he said negative developments, such as the effects of economic recession, meant some firms were surviving but were “running on empty now”. Their financial viability was a concern to the SRA and over the next three years would be “a constant issue for us to keep an eye on”.

Mr Collins highlighted as another “area of concern” the personal injury market, which he said had been “incredibly vibrant and successful” in recent years, but the amount of change being “thrown at the sector by government” was provoking doubts “about whether firms will be able to adapt quickly enough to continue to run their businesses”.

SRA executive director Samantha Barrass responded to solicitors who complained that they had heard nothing about the compliance officer nominations and feared being in breach of regulations on 1 January.

The SRA will be “putting out communications” to provide “absolute clarity” this week “and also just before 1 January”, Ms Barrass said. Andrew Garbutt, the SRA’s director of risk, said: “The absence of any news is good news; you are likely to get your approval very shortly.”

One questioner from the floor complained that his firm had received five letters from the SRA “threatening Hell, damnation and the Solicitors Disciplinary Tribunal” for having failed to nominate compliance officers, despite the recognised bodies concerned having been granted waivers the week before.

Several solicitors suggested that the tone of the SRA’s communications with the profession in general was excessively harsh.

Ms Barrass apologised for “bureaucratic errors” but pointed out that warning letters – when properly directed – had been sent to firms that have failed to nominate compliance officers only after numerous attempts to engage with them. “I think that the tone of those letters that go out is entirely appropriate in the circumstances,” she said.

Addressing concerns raised by solicitors over what level of detail would be required from compliance officers regarding recording minor “non-material” regulatory breaches, Mr Garbutt said the SRA did not want “spreadsheets” containing “lots of individual small breaches” but instead wanted to hear about “trends and patterns”.

Finally, SRA chief executive Antony Townsend confirmed that on the last day of practising certificate renewals the authority had received hundreds of calls from solicitors saying they were unable to renew, for instance because they had forgotten their MySRA passwords. The SRA would accommodate the latecomers, Mr Townsend confirmed.

 

 

 

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    Readers Comments

  • Interesting comments these from the SRA. As one of these new-fangled ABS’s, I would have to agree that innovation doesn’t exactly seem a hot topic for many. Let’s face it, most of the the early adopters are the same old companies just looking to restructure their business. However, I take issue with the fact that non-ABSs are more innovative – this is a sweeping statement of the tallest order, and from our direct experience, it’s very much “business as usual” from traditional law firms. If anything, I would say that we have found law firms being rather more conservative over the past 12 months as the harsh economics of relying on an existing client base start to bite. We have seen more problems over deals being done, being caused by “who is going to pay for this” from traditional firms than ever before. Innovation is driven by individuals not a company structure. Perhaps this is just the SRA making excuses for the woeful takeup of ABS licences that we’ve seen over the past year.


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