Regulation & compliance expert Tracey Calvert of Oakalls Consultancy explains the major changes that will be introduced. We are now on the countdown to the end of the SRA Handbook and the beginning of the era of the SRA Standards and Regulations.
The SRA has indicated that they expect the new resource to become effective by the end of this July, with guidance for firms expected in February.
You will remember that the 2011 launch of the SRA Handbook heralded some far-reaching changes which rapidly altered the legal landscape with outcomes, risk–based regulation and compliance officers introduced into the mix. In 2019 outcomes will disappear (instead, we are going to be asked to comply with Standards of professional conduct) but risk management & compliance, and compliance officers remain.
The difference between 2019 and 2011 will be the SRA's expectations of us; 7 years on and there will be no honeymoon period in which we will be allowed to gradually familiarise ourselves with the changes. No light touch response from the regulator. We will be expected to demonstrate a seamless transition from the old to the new, and firms should be preparing for the changes now so that business as usual continues uninterrupted.
Some of the major changes which require your attention
- The current 10 Principles will reduce to seven – honesty is to be introduced whilst the duty to provide a proper standard of service, to be open with regulators and ombudsmen, to have proper governance and to protect client money and assets are moving to other parts of the regulatory toolkit
- The current Code of Conduct is being divided into two; one Code for solicitors, registered European lawyers and registered foreign lawyers and the other Code for firms. Solicitors will be individually accountable for the actions of those who they manage and supervise.
- The Code for Firms continues to extend the SRA's regulatory reach to employees of SRA-authorised law firms. It is also the new location for compliance officers to find their roles which will include the need to report serious, and not material, breaches to the SRA
- The SRA Accounts Rules are – finally! – being dragged into the twenty-first century and a lot of the very familiar content about timekeeping and similar will be replaced with your own judgement calls
- Solicitors' entitlement to provide legal services is being further liberated and you will be able to provide services as freelancers and also provide unreserved legal services from unauthorised businesses subject to certain conditions and restrictions.
What will make this transition smooth? The answer, as with all the changes we have had to accommodate over recent times, is a compliance project.
Prepare yourself with these key tasks
1. Read the materials and ensure that you understand the developments, the scope for change, the differences with your current way of complying. For example, do you need to consider how you will work with the new types of practising solicitors that you may come across on the other side of matters? Do you want to make any changes to the way you handle client money?
2. Ensure the decision-makers are aware of the changes so that alterations can be agreed. Here, we are talking about the managers, owners, compliance officers, supervisory and accounts team colleagues who need to agree on proposals you will be suggesting
3. Review and update your current compliance documentation. A fuss-free relationship with the regulator is facilitated by proof of compliance and these documents will - at the very least - need to be updated to reflect the language of the Standards and Regulations
4. Identify and then train all relevant staff who need to understand the external changes and the internal response. Untrained colleagues are a risk to themselves and a risk to the longevity of your business
5. Build in review periods so that the initial response can be monitored for effectiveness and appropriateness.
6. Develop ways in which you will keep informed about regulatory guidance (we are being advised that the SRA will introduce guidance kits to support us) and, of course, the Law Society's own best practice advice and resources.
Views expressed in our blogs are those of the authors and do not necessarily reflect those of the Law Society.
Tracey will be on a Q&A panel: The COFAs Toolkit at our Risk and Compliance annual conference Friday 15 March