In-house solicitors performing work for your employer
If you are performing work in-house for your employer, the SRA does not require you to obtain mandatory professional indemnity insurance ( PII ) in accordance with the minimum terms and conditions.
The SRA Indemnity Insurance Rules only apply to solicitors in 'private practice' and, therefore, do not apply to employees conducting work for their employer. Liability of in-house solicitors is covered by their employment contract and principles of vicarious liability.
As such, it is for your employer to decide whether or not it is necessary to obtain insurance.
In-house solicitors performing work for other clients - is it permitted?
The SRA Practice Framework Rules prevent in-house solicitors acting for clients other than their employer except in certain circumstances (rule1.1(e)).
The only circumstances where in-house solicitors can act for clients other than their employer, are set out in rule 4 of the Practice Framework Rules (rules 4.4 to 4.26). Depending on these circumstances, you may need to have PII in place.
You may only act for clients other than your employer where you are able to act without compromising the Principles or your obligations under the SRA Code of Conduct (rule 4.1(a)).
In-house solicitors usually work within businesses that are not regulated legal practices. As such, rule 4 does not apply to solicitors within licensed bodies or authorised non- SRA firms acting within the scope of their authorisation.
These rules do apply, however, to solicitors in a licensed body or an authorised non- SRA firm if they conduct work outside the scope of the firm's own authorisation, either for the firm itself or for work colleagues (in accordance with rules 4.4 to 4.6); related bodies (rules 4.7 to 4.9); or pro bono work (rules 4.10 to 4.11) (see rule 4.3 and guidance note (i)).
You can only provide reserved legal activities to the public if there is an authorisation in place (rule 4.1(b)). The general principle, subject to limited exceptions, is that your employer itself will need to be authorised if, in your capacity as an employee and as part of your employer's business, you wish to provide reserved legal services 'to the public' (section 15(4) of the Legal Services Act 2007 (LSA)).
Nothing in rules 4.4 to 4.26 supplants the need for your employer to obtain authorisation if you are to perform work for someone other than your employer. For example, you are employed by an association to act for members in accordance with rule 4.12, members of the association may be considered to be 'the public or a section of the public' for the purpose of the LSA and authorisation may be required (see guidance note (ii)). It is important to remember that your employer's business may develop in such a way that it requires authorisation.
You must satisfy yourself that any such authorisation is in place before conducting any reserved legal activity (rule 4.1(b)).
Circumstances where working for other clients is permitted
Pro bono work - rules 4.10-11
In-house solicitors may conduct work on a pro bono basis in the course of their practice for a client other than their employer provided:
- there is PII in place
- no fees are charged (or a conditional fee agreement where costs received are paid to a charity), and
- the work does not involve reserved legal activities, unless the providing these services to the public is not part of your employer's business (with or without a view to profit).
The ability of in-house solicitors to act for clients on a pro bono basis is limited by the LSA, which generally requires that the provision of reserved legal services to the public is carried out through an authorised body.
Rule 4.10 sets out the requirements, including the prohibition on undertaking reserved legal activities unless the services provided to the public are not part of your employer's business.
Guidance note (x) to rule 4 of the Practice Framework Rules sets out relevant factors to be considered, taking into account all the circumstances, to help determine whether activities form part of your employer's business. These are:
- relevance of work to the employer's business
- whether the work is required of the employee by the employer
- how often work is carried out
- where the work is carried out
- when the work is carried out
- whether the work is explicitly carried out on the employer's behalf
- the provision of the necessary PII
- the extent to which the employer relies on or publicises the work
- whether the employer provides management, training or supervision for the work
- whether the employer specifically rewards the employee in any way for the work
- how many employees carry out the work, and the overall proportion of time spent, and
- the extent to which the work complements or enhances the employer's business.
If there is a clear relationship with your employer's business, you will not be permitted to conduct pro bono services; for example, where the employer describes its business as including the provision of pro bono services or where it may generate business for your employer.
Rule 4.11 also states that in-house solicitors are not permitted to conduct work on a pro bono basis in conjunction with services provided by their employer under rule 4.12 (associations), 4.13 (insurers), 4.14 (commercial legal advice services) or 4.19-21 (foreign law firms).
Commercial legal advice services - rule 4.14
You can be employed by commercial organisations to provide telephone legal advice services to persons making enquiries provided that the advice is limited to telephone only, with a follow-up letter when necessary. PII cover is required and you must not undertake any reserved legal activities.
Law centres, charities and other non-commercial advice services - rule 4.16-17
This applies to in-house solicitors employed by a law centre or advice service operated by a charitable or similar non-commercial organisation.
It does not apply to associations formed for the benefit of its members as this situation is covered by rule 4.12, which is outlined below, (rule 4.17).
Solicitors may give advice and otherwise act for members of the public provided that the organisation meets the requirements in rule 4.16, which include a requirement to have PII cover for legal activities carried out by in-house solicitors.
If your employer obtains authorisation as a licensed body you will not need to rely on the exceptions in rule 4 (guidance note (xii)).
A solicitor who works as a volunteer (as opposed to an employee) for such an advice service must comply with the SRA Indemnity Insurance Rules unless exempted by a waiver (guidance note (xii)).
Foreign law firms - rule 4.19-21
Being employed overseas by a foreign law firm will not usually fall within the definition of in-house practice, if your employer is a lawyer or a law firm (guidance note (xiv)).
Rule 4 only applies if you are employed by practising lawyers of another jurisdiction that, firstly, are not struck off the resister of foreign or European lawyers and, secondly, are not practising in that context as a solicitor or REL (rule 4.19).
As an in-house employee of a foreign law firm under rule 4.19, you may not undertake reserved work for clients or immigration work (unless your employer is separately authorised) (rule 4.20 and guidance note (xiii)).
There are also special requirements about informing clients that they are not covered by the SRA 's compulsory insurance scheme and that your employer is not regulated by the SRA . There must also be equivalent PII cover in place.
Work colleagues - rules 4.4-6
In-house solicitors may act for current and former work colleagues, subject to certain safeguards, provided the matter relates to and arises out of the person's work for the employer and is not a claim arising as a result of personal injury to that person.
Guidance note (ix) states that this does not permit reserved legal activities to be offered as part of a benefit under an employment package.
Those working in-house will need to consider whether they are allowed to act on a case-by-case basis and, in particular, the extent to which there is a direct relationship between the work colleague's employment and the reserved legal activity.
You must be satisfied that that the work colleague does not wish to instruct another lawyer and no charge can be made for your work unless those costs are recoverable from another source.
Related bodies - rule 4.7
In-house solicitors (other than those employed by local governments – rule 4.8) may act for their employer's holding, associated or subsidiary company (rule 4.7(a)) or a partnership, syndicate, LLP or joint venture in which their employer has an interest (rule 4.7(b)).
In-house solicitors may also act for trade associations of which their employer is a member (rule 4.7(c)) or a club, association, pension fund or other scheme operated for the benefit of employees (rule 4.7(d)).
You should consider whether any of the other circumstances in rule 4 apply to the work conducted for related bodies, as for the purpose of rule 4.10 to 4.14 references to your 'employer' include related bodies of that employer (rule 4.9).
Associations - rule 4.12
If employed by an association, in-house solicitors may act for a member of that association provided that:
- membership of the association is limited to those engaged or concerned in trade, occupation or specialist activity
- the association is formed bona fide for members and is not formed for the purpose of securing assistance in legal proceedings
- non-contentious matters are not charged to the member and the association indemnifies the member in relation to costs and disbursements in contentious matters, and
- you act only in matters that relate to or arise out of the particular trade, occupation or specialist activity of the association, for which the association is formed.
Insurers and commercial legal advice services - rule 4.13 and 4.14
In-house solicitors employed by insurers may act on behalf of the insurer using the subrogated rights of the insured and also for others in the limited circumstances outlined in rule 4.13.
If you are employed as a solicitor by an insurer who runs a commercial legal telephone advice service, the restrictions in rule 4.14 do not prevent you acting for an insured in accordance with rule 4.13 (guidance note (xi)).
Local government
Local government in-house solicitors may act for another organisation or person to whom the employer is statutorily empowered to provide legal services provided the conditions in rule 4.15(b) to (g) are met.
Crown, non-departmental public bodies and LSC - rule 4.18
Employees of the Crown, a non-departmental public body or the LSC may give legal advice and act for persons other than their employer if it is part of carrying out the lawful functions of the employer.
In-house practice overseas - rule 4.22-25
The pro bono rules in 4.10 and 4.11 applies to overseas practice.
In-house lawyers in overseas practices may only act for their employer or companies controlled by their employer (rule 4.24(a)-(d)).
They may also act for employees of these bodies in relation to matters arising out of the work of the company or organisation (except an employee's personal injury claim) and only if no charge is made for their work (rule 4.24(e)).
If you are a solicitor registered in another state under the Establishment Directive, you may practice in-house to the extent that a member of the local legal profession is permitted to do so (rule 4.25).
Regulatory bodies - rule 4.26
Employees of regulatory bodies may in carrying out the function of the employer give legal advice to other persons and, when carrying out statutory functions, may act generally for such persons.
Performing work for other clients - do I need PII ? - rule 4.2(a) & (b)
PII required
If you act for a client other than your employer in any of the following situations, you must have PII cover in place:
- pro bono work (rule 4.10),
- commercial legal advice services (rule 4.14)
- law centres, charities and other non-commercial advice services (rule 4.16), and
- foreign law firms (rule 4.19).
The PII cover must be reasonably equivalent to that required under the SRA Indemnity Insurance Rules.
For further information on general PII requirements see the PII practice note.
No PII required
In the following circumstances, there is no requirement to have PII cover in place.
You must, however, consider whether your employer has appropriate indemnity insurance to meet any award for professional negligence against you for which your employer might be vicariously liable.
This cover should be reasonably equivalent to that required under the SRA Indemnity Insurance Rules. If not, you must inform your client in writing that you are not covered by the compulsory insurance scheme.
The circumstances where you are permitted to work for a client other than your employer without there being a mandatory requirement for PII cover are:
- work colleagues (rules 4.4-6)
- related bodies (rules 4.7-9)
- associations (rule 4.12)
- insurers (rule 4.13)
- local governments (rule 4.15)
- the Crown, non-departmental public bodies and the Legal Services Commission (rule 4.18)
- in-house practice overseas (rules 4.22-25)
- regulatory bodies (rule 4.26)
For further information on general PII requirements see the PII practice note.
Other issues in-house solicitors should consider
You may also need to consider whether you should hold a practising certificate, see http://www.sra.org.uk/solicitors/code-of-conduct/guidance/questionofethics/November-2012.page