Unregulated firms employing solicitors “must be clear with clients”

SRA: Clients must understand limitations

The Solicitors Regulation Authority (SRA) has spelled out the importance of unregulated firms that employ solicitors under its new rules ensuring that clients understand the limitations of the arrangement.

The regulator has issued guidance to put into practice its controversial decision to allow solicitors to practise from unregulated businesses and advise third-party clients.

One of the guidance notes, which comes into force with the new Standards & Regulations on 25 November, tells firms: “Although the solicitor will be personally regulated by us, it is important that you do not either deliberately or inadvertently give the impression that your business is regulated by us.

“So, whilst you can, for example, state on your website that you employ X solicitor and that they are authorised and regulated by the SRA in their personal capacity, it should be made clear that this authorisation and regulation does not apply to your firm, to the services that you offer more widely or to work carried out by others.”

The note for solicitors stresses the importance of clients understanding that they are providing a service on behalf of an employer that is not authorised and regulated to provide legal services.

This will include explaining to the client which services are provided by the solicitor and which by others, along with the “consequences of this in terms of the different protections available if the activities are subject to our jurisdiction and that of the Legal Ombudsman”.

The guidance adds: “Explaining the position to clients will be more straightforward if you are handling or supervising either a discrete or particular aspect of the work, or indeed are handling or supervising the whole matter.

“You will remain responsible for the work of those you supervise under our standards. The Legal Ombudsman may also accept a complaint where the matter has been supervised by a solicitor. The Legal Ombudsman will take into account your responsibility for the work of those you supervise.”

The guidance says that, where a solicitor is working as part of a joint team and it is not possible to draw a clear boundary around the services they provide, “then the client should be informed that you will be carrying on this work jointly with others and you will be accountable to us for the work as a whole”.

The SRA adds: “In practice, when investigating any concerns, we will consider your personal conduct and behaviour, and degree of responsibility for any problems that may arise.”

Clients will also need to be told, “in a way that they understand”, that the solicitor is not required to have professional indemnity insurance that meets the SRA’s minimum terms and conditions, whether or not nonetheless their work is covered by insurance, and that they will not be able to make a claim on the SRA Compensation Fund.

The guidance highlights the importance of solicitors complying with the SRA principles, and recommends working with employers to put in place effective conflict-checking procedures.

“As part of your discussions with your employer in relation to your obligations as a solicitor, you may also want to discuss with them the appropriate training of staff on confidentiality and conflicts of interest and confirm that employees’ contracts contain appropriate provisions to address these issues.”

Though solicitors will not be allowed to hold client money in an account in their personal name, the SRA says they can be a signatory to a bank account held by the business in its own name. Firms will also need to set up a complaints procedure for complaints about their employed solicitors, and the right to go to the Legal Ombudsman.

    Readers Comments

  • derek says:

    what about sole traders , one-man company of unregulated solicitors
    they seem to be able to get away with murder ?

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