City firms, conveyancers and other sectors of the legal profession could seek their own sector-specific regulation if the Law Society fails to approve the Solicitors Regulation Authority’s application to become an alternative business structures (ABS) regulator, SRA chairman Charles Plant warned today.
Speaking to Legal Futures after the SRA board approved the application, as well as the new Solicitors Handbook which will introduce outcomes-focused regulation (OFR) of solicitors and ABSs from 6 October, Mr Plant said failure to approve the application at next week’s Law Society council meeting would “open up a hornets’ nest” that would not be in the best interests of either the profession or consumers.
Though there will be other ABS regulators – initially the Council for Licensed Conveyancers and in time the Institute of Legal Executives – most firms and ABSs will seek regulation from the SRA if possible. But if the SRA is not open to ABSs, not only will the Legal Services Board step in to regulate directly, but ABSs will also look for other regulators. Mr Plant predicted that this would lead to “a range of people seeking to directly regulate solicitors”.
This could be sector based, with the likes of City firms deciding they were better off with their own regulator if there was not a single regulator for all solicitors.
“What’s been impressed on us by the Law Society and others is the need for a level playing field,” Mr Plant said.
“The board believes it is in the public interest for ABSs to be regulated by the SRA, and therefore subject to the same rigorous professional standards as traditional law firms. The board has been very mindful of the need not simply to design a robust scheme, but also to ensure that the SRA is an organisation capable of delivering it.”
Also speaking to Legal Futures, SRA chief executive Antony Townsend sought to allay fears that the personal responsibility that will attach to the new compliance officer positions – for legal practice and for finance and administration – that every law firm will have to appoint, will discourage people from taking on the roles. “The [officers] need to take the role seriously, but we have tried to make it clear from the outset that they are not a sacrificial lamb figure – they are the focus of dealings [with the SRA] but that in no way gets the partners off the hook,” he said.
Mr Townsend added that firms which currently adhere to the rules will not be tripped up by the new handbook if they continue in the same way once OFR is introduced, but they will not make use of the benefits of OFR if they do.
The handbook – which does not require council approval – will be published to the profession on 6 April.