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Entity-based regulation

24 April 2018

This practice note includes detailed advice on:

  • the principle of firm or entity-based regulation
  • the role of the SRA
  • business management considerations  

Update notes

This practice note updates the version published in October 2016.

The following section has been updated:

3.3 Financial stability and other risks

More detail has been added to this section.

Legal status

This practice note is the Law Society's view of good practice in this area. It is not legal advice.

Practice notes are issued by the Law Society for the use and benefit of its members. They represent the Law Society's view of good practice in a particular area. They are not intended to be the only standard of good practice that solicitors can follow. You are not required to follow them, but doing so will make it easier to account to oversight bodies for your actions.

Practice notes are not legal advice, nor do they necessarily provide a defence to complaints of misconduct or of inadequate professional service. While care has been taken to ensure that they are accurate, up to date and useful, the Law Society will not accept any legal liability in relation to them.

For queries or comments on this practice note contact the Law Society's Practice Advice Service.

Professional conduct

The Solicitors Regulation Authority (SRA) introduced outcomes-focused regulation (OFR) in October 2011. In addition the SRA publishes a Handbook which sets out all of the SRA's regulatory requirements. The SRA Handbook includes a Code of Conduct (the SRA Code).

Within the Handbook, these are particularly relevant:

  • the Practice Framework Rules 2011
  • the SRA Authorisation Rules

SRA Principles

There are 10 mandatory principles which apply to all those the SRA regulates and to all aspects of practice. The principles can be found in the SRA Handbook.

The principles apply to solicitors or managers of authorised bodies who are practising from an office outside the UK. They also apply if you are a lawyer-controlled body practising from an office outside the UK.

You must take into account all of the SRA's principles when you or your practice are thinking about entering an outsourcing arrangement and ensure that any arrangement does not prevent you from adhering to any of the principles. You should always bear in mind what the 10 principles are and use them as your starting point when implementing the outcomes. 

Terminology

Must - A specific requirement in the code or legislation. You must comply, unless there are specific exemptions or defences provided for in the code or relevant legislation.

Should - Good practice for most situations in the Law Society's view. If you do not follow this, you must be able to justify to oversight bodies why this is appropriate, either for your practice, or in the particular retainer.

May - A non-exhaustive list of options for meeting your obligations. Which option you choose is determined by the risk profile of the individual practice, client or retainer. You must be able to justify why this was an appropriate option to oversight bodies.

The Law Society also provides a full glossary of other terms used throughout this practice note

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Practice Advice Service

The Practice Advice Service provides a dedicated support line for Law Society members and employees of law firms. Call us on 020 7320 5675.

> Contact the Practice Advice Service
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