Solicitors on demand: legal secondments
Since the passage of the Legal Services Act 2007, which aimed to liberalise the legal services market in England and Wales, we’ve seen a variety of alternative business structures entering the market and successfully competing with traditional solicitor partnerships.
Law firms have also been coming under increasing pressure from their corporate clients to provide competitively priced dedicated legal resources to work alongside the client’s in-house legal team.
In responding to these challenges some law firms have set up structures through which they can provide their clients with dedicated expert legal resources, without having to lock their core fee-earners into long secondments with the client.
Typically, such models operate through an entity separate from the firm’s partnership, which is often non-SRA regulated. Some have grown into completely independent non-SRA regulated companies.
Such legal secondment businesses (LSBs) do not typically hire lawyers as their employees, unless they also provide ‘umbrella company’ services, in which case they might offer to employ a solicitor on a fixed-term employment contract.
Usually the LSB signs up lawyers on its books and seeks secondment opportunities for them at the LSB’s clients. In most cases the arrangement is non-exclusive, and the lawyer is free to seek opportunities through other LSBs or recruitment agencies or provide services directly to their clients.
If a client of an LSB (typically a non-SRA regulated organisation) needs a lawyer with particular expertise, and the LSB has a suitable lawyer on its books, the LSB arranges for the client to interview that lawyer.
If the client is happy to take the lawyer on, contracts are put in place:
- between the client and the LSB for the placement of that lawyer with the client, and
- between the LSB and the lawyer’s personal services company (PSC) or an umbrella company that employs the lawyer if there’s no PSC, for the provision of legal services to the LBS’s client
There will be no contracts signed between the lawyer and the LSB’s client, except possibly for the client’s standard confidentiality and intellectual property agreements, code of conduct and ethics and similar standard corporate paperwork for contractors.
The lawyer’s PSC or the umbrella company will charge the LSB for the lawyer’s services (usually based on a negotiated daily or an hourly rate), and the LSB will charge its client for their services, based on the lawyer’s time spent working for the client.
The secondment could last from a few weeks to many months or even years. It could also be linked to a particular project run by the client.
Working arrangements also vary, but often the lawyer is required to work in the client’s office alongside the client’s in-house legal team.
The model gives the client a dedicated high quality legal resource at a much lower cost than the same legal services provided by a law firm.
It gives the lawyer flexibility and freedom to pursue different job opportunities without having to commit to a particular job long term.
About this guide
This guide covers the position of a solicitor working through such a model. It explains the regulatory requirements and the conduct rules the solicitor and the principal solicitor with supervisory duties at the client company must and comply with.
There are three typical scenarios for legal secondments:
- scenario 1, where the client is a non-SRA regulated organisation, and the solicitor is seconded for the provision of legal services to that organisation and entities and persons within its group
- scenario 2, where the client is a non-SRA regulated organisation, but it provides unreserved legal services to the general public, and the solicitor is seconded for the provision of such unreserved legal services to the public on behalf of the organisation
- scenario 3, where the solicitor is seconded to an SRA regulated organisation from another SRA regulated organisation (which could be the LSB or the solicitor’s PSC) to provide legal services to clients of the first organisation
This guide focuses on scenarios 1 and 2. For information on scenario 3, practising in an SRA-regulated firm, see the SRA’s Standards and Regulations resources.
This guide does not cover tax or the employment positions of lawyers working through such a model. Tax and employment arrangements are complex and will depend on the details of the specific situation. For information on these areas see the government’s guidance on off-payroll working.
If you’re considering this model of practice, you need to be aware of the SRA’s regulatory compliance obligations which apply to solicitors irrespective of the role, environment or organisation they work in.
In November 2019 the SRA introduced new Standards and Regulations (STaRs) which set out mandatory rules for SRA authorised practitioners and firms. Under the STaRs all solicitors must comply with the SRA Principles and the Code of Conduct for Solicitors, RELs and RFLs.
The SRA Principles describe the fundamental tenets of ethical behaviour the SRA expects all those it regulates to uphold. The Principles require solicitors to act:
- in a way that upholds the constitutional principle of the rule of law, and the proper administration of justice
- in a way that upholds public trust and confidence in the solicitors’ profession and in legal services provided by authorised persons
- with independence
- with honesty
- with integrity
- in a way that encourages equality, diversity and inclusion
- in the best interests of each client
The SRA Code of Conduct for Solicitors, RELs and RFLs (the Code) covers requirements for:
- maintaining trust and acting fairly
- dispute resolution and proceedings before courts, tribunals and inquiries
- service and competence
- client money and assets
- business requirements such as referrals, introductions and separate businesses
- conflict, confidentiality and disclosure
- client identification, complaint handling, client information and publicity
There may be other professional obligations that solicitors considering legal secondments need to comply with, depending on the nature of business and clients they are advising.
You should therefore do research, including checking the relevant SRA guidance, case studies, warning notices and topic guides available on the SRA website, to make sure you understand all the relevant requirements before taking on an assignment.
If you’re working through this model you’re likely to have contractual relationships with one or more LSBs, recruitment agencies and other third parties, and will be providing services to many clients.
Such working environments may create situations where loyalties, roles and responsibilities become complicated, and a risk of potential conflict of interest may arise.
Apart from juggling different roles, solicitors working in this way must be clear who their client is and understand that their primary duty lies with that client and not their PSC, or the LSB that found them the secondment.
Although if you're seconded to work for a particular organisation you will not usually be considered its employee under employment law, and consequently the organisation will not be your employer, from the regulatory point of view, you're considered as a lawyer of that organisation.
Therefore you, as other lawyers of the organisation, are free to act for the organisation and for other persons or entities within that group (scenario 1). These entities and persons will be your clients.
When acting for more than one client, you must act in the best interest of each client and avoid any conflicts of interests or any potential or actual breach of confidentiality.
Other important considerations arise when, as part of a secondment, you are required to provide legal services to the public or a section of the public (scenario 2). If you practise in this way you must pay particular regard to:
- the SRA Authorisation of Individuals Regulations
- relevant legislation
- the restrictions on the type of work that you can carry out when providing services in this way
More detailed information can be found in the SRA guidance on unregulated organisations employing SRA regulated lawyers which explains the restrictions on the work that may be carried out through such organisations.
It's equally important to consider these issues when taking up further or parallel assignments to ensure that there are no actual or potential conflicts of interests or confidentiality.
You should also be aware that acting in a client’s best interests does not override your other duties, including the duty of acting with honesty, independence and integrity.
All solicitors, including those on legal secondments, are subject to requirements regarding managing conflicts of interest, confidentiality and disclosure.
The Code (paragraph 6) prohibits solicitors from acting in situations where a solicitor’s own interest conflicts with a client’s interest or there is a significant risk of a conflict:
“6.1. You do not act if there is an own interest conflict or a significant risk of such a conflict.
6.2. You do not act in relation to a matter or particular aspect of it if you have a conflict of interest or a significant risk of such a conflict in relation to that matter or aspect of it, unless:
- the clients have a substantially common interest in relation to the matter or the aspect of it, as appropriate; or
- the clients are competing for the same objective,
and the conditions below are met, namely that:
- all the clients have given informed consent, given or evidenced in writing, to you acting;
- where appropriate, you put in place effective safeguards to protect your clients' confidential information; and
- you are satisfied it is reasonable for you to act for all the clients.”
The Code (paragraphs 6.3 to 6.5) also sets out solicitors’ obligations regarding confidentiality and disclosure. The duty of confidentiality will continue after the end of an assignment.
The duty of disclosure to a client applies to all information material to the matter that a solicitor has knowledge of, except when (paragraph 6.4 of the Code):
- “the disclosure of the information is prohibited by legal restrictions imposed in the interests of national security or the prevention of crime;
- your client gives informed consent, given or evidenced in writing, to the information not being disclosed to them;
- you have reason to believe that serious physical or mental injury will be caused to your client or another if the information is disclosed; or
- the information is contained in a privileged document that you have knowledge of only because it has been mistakenly disclosed.”
Dealing with conflicts
These two duties of confidentiality and disclosure might sometimes come into conflict. Generally, in such situations the duty of confidentiality takes precedence. However, if such a situation arises you should carefully consider whether in the circumstances you can continue to act for the client to which you owe the duty of disclosure. The SRA guidance on confidentiality of client information explains this further.
Having relevant confidential information that you cannot disclose might also put you in a difficult situation in relation to your other duties, such as acting with honesty, independence and integrity.
Paragraph 6.5 of the Code restricts solicitors from acting for a client where that client has an interest adverse to another party, for which the solicitor or another person in their department is acting or has acted previously, unless certain strict conditions are met.
“You do not act for a client in a matter where that client has an interest adverse to the interest of another current or former client of you or your business or employer, for whom you or your business or employer holds confidential information which is material to that matter, unless:
- effective measures have been taken which result in there being no real risk of disclosure of the confidential information; or
- the current or former client whose information you or your business or employer holds has given informed consent, given or evidenced in writing, to you acting, including to any measures taken to protect their information.”
Solicitors working for companies on legal secondments may well specialise in specific areas of law. This means it’s more likely that you’ll be asked to work for companies that are in competition with each other. Examples are banking, aircraft leasing or the petroleum and gas industries.
The risk, therefore, is that confidential information gained on one assignment is more likely to be relevant to new clients.
Before undertaking a new assignment, you should first consider these issues and, where necessary, discuss with your LSB or recruitment agency what measures need to be put in place to avoid or appropriately manage any potential conflicts. Consider and discuss whether a new assignment might simply be too risky in terms of meeting regulatory requirements.
Whilst a new client could agree to the duty of disclosure being varied, this should not be expected routinely. You should not make such an agreement without carefully considering whether you could act for the new client in an unbiased way in the light of any knowledge you have about former clients.
You should be particularly cautious if the secondment is in an unregulated business providing services to the public (scenario 2). Advising a range of clients may compromise client confidentiality or risk conflict. Solicitors advising the public are subject to additional obligations, including taking steps to identify the client, maintain a complaints procedure and provide clients with transparency information.
One of the drivers that may attract solicitors to legal secondments is the opportunity to expand work experience, and learn new areas of practice or skills.
While broadening work experience is a good thing, when taking up assignments you need to ensure you have appropriate professional knowledge and skills to assist clients in a competent manner to satisfy the SRA requirements (paragraphs 3.2 to 3.6 of the Code).
“3.2. You ensure that the service you provide to clients is competent and delivered in a timely manner.
3.3. You maintain your competence to carry out your role and keep your professional knowledge and skills up to date.
3.4 You consider and take account of your client's attributes, needs and circumstances.”
The Code also puts an obligation on solicitors to maintain their competence through continuing competence development so their skills and knowledge stay up to date.
Many in-house legal functions have formal performance appraisal programmes and training plans. However, seconded solicitors are unlikely to be included in those. Therefore, you should individually reflect on your performance and training needs, taking feedback from your supervisor and clients to create and maintain your personal professional development plan.
In 2016 the SRA removed the requirement to count continuing competence hours and instead solicitors are encouraged to reflect on the quality of their practice and identify any learning and development needs.
All solicitors must make an annual declaration to the SRA that they have undertaken regular learning and development and that their skills and knowledge remain up to date.
Overall, the recipient organisation is responsible for day-to-day management and supervision of a solicitor working on a legal secondment.
However, solicitors could have a supervisory role, for example when filling in for senior roles with line management responsibilities.
If you take up supervisory and line management responsibilities you need to be aware that you are personally accountable for the work of others, including regulated and non-regulated professionals, as per paragraphs 3.5 and 3.6 of the Code which state:
“3.5. Where you supervise or manage others providing legal services:
- you remain accountable for the work carried out through them; and
- you effectively supervise work being done for clients.
3.6. You ensure that the individuals you manage are competent to carry out their role, and keep their professional knowledge and skills, as well as understanding of their legal, ethical and regulatory obligations, up to date.”
In the case of in-house secondments, a solicitor in a managerial role could typically be responsible for supervising a team of solicitors (including those on secondment), paralegals, and other not legally trained staff. This equally applies to solicitors on secondment, where their secondment duties include managing or supervising other members of an in-house legal team.
To meet the SRA regulatory requirements, solicitors in supervisory roles should consider putting measures in place to ensure appropriate oversight of the team’s work.
Our practice note on solicitors offering legal services from unregulated entities suggests measures such as:
- pre-approval before work is sent to clients
- being copied into correspondence
- good record keeping
As SRA regulated practitioners, solicitors have a duty to co-operate with the SRA and the Legal Ombudsman. This includes providing information to the SRA and reporting serious breaches of the rules (paragraphs 7.3 to 7.7 of the Code), as well as supplying information and documents on request from the SRA or the Legal Ombudsman.
The reporting obligations apply directly to each solicitor, however, if you’re seconded to an in-house legal team it would be advisable to co-ordinate such matters with a senior member of the team with relevant responsibilities, subject to other considerations, such as tipping off, privacy and whistleblowing rights.
When seconded to an organisation that does not have other practising solicitors with reporting responsibilities, you should make the LSB or the recruitment agency and the client organisation aware of your professional statutory obligations to the SRA.
This will be particularly relevant if you undertake a legal secondment with an unregulated business providing services to members of the public (scenario 2), where members of the public will have the right to complain to the Legal Ombudsman if they're not satisfied with the service.
In-house lawyers practising as solicitors are required to hold a current practising certificate. They must do so whether or not they are carrying out reserved activities.
It is a criminal offence as well as a breach of the SRA rules to practise as a solicitor, whether in a firm or in-house, without a practising certificate (unless you are entitled to rely on the exemption in section 88 of the Solicitors Act 1974).
When updating your SRA professional details records on the SRA website, be aware of the bulk renewal option. If you tick this option you will be included within the bulk renewal process of the organisation you have entered in the professional details section, which might not be appropriate.
Solicitors on legal secondments providing services overseas on a permanent basis need to comply with the SRA Overseas Rules.
If you provide services only temporarily from outside of the jurisdiction, or if your practice mainly consists of providing legal advice to clients in England and Wales, you will still need to comply with the Code.
Solicitors on legal secondments can undertake a range of different legal activities for a variety of clients, including members of the public.
However, some practising restrictions apply in relation to specific legal activities, depending on the type of business, whether in-house, regulated, non-regulated, and providing services to the public or not.
Solicitors on in-house secondments (scenario 1) are in general authorised to undertake all reserved legal activities set out under the Legal Services Act 2007 for their client, except notarial activities. However, they are restricted from undertaking reserved activities for members of the public on behalf of their client business (scenario 2), unless the business is authorised to carry out reserved work.
Additional restrictions apply to immigration work, claims management and financial services. Solicitors wanting to practise in these areas must get additional authorisation from an appropriate authorised body.
From November 2019 the SRA eased restrictions on solicitors providing non-reserved activities to members of the public from unregulated businesses.
Solicitors are free to carry out such services providing they meet all the requirements regarding client care, in particular those about notifying the public of the loss of some regulatory protections, and including complying with the SRA Transparency Rules.
See our practice note on offering legal services to the public from unregulated entities.
Additional information for solicitors working outside a law firm is available from the SRA.
Solicitors working on legal secondments are not allowed to hold client money in an account in their personal name. Client money is defined in paragraph 2.1 of the SRA Accounts Rules.
Paragraph 4.3 of the Code provides:
"You do not personally hold client money save as permitted under regulation 10.2(b)(vii) of the Authorisation of Individuals Regulations, unless you work in an authorised body, or in an organisation of a kind prescribed under this rule on any terms that may be prescribed accordingly."
The SRA considers ‘client money’ to include:
- money that clients pay a solicitor on account of the solicitor’s charges or third-party costs (such as fees for expert reports)
- any damages that a solicitor’s client receives as part of a settlement of a case
- the assets of an estate that is being administered by the solicitor’s firm
- any other money that a solicitor is holding on their client’s behalf to complete a transaction or for investment purposes
This does not prevent you from being a signatory to a bank account held by an organisation you're seconded to, however in the organisation’s own name.
Solicitors performing work in-house for their employer or working for unregulated businesses providing non-reserved services to the public are not required to obtain mandatory professional indemnity insurance (PII) in accordance with the SRA minimum terms and conditions.
The SRA Indemnity Insurance Rules apply to firms that are authorised bodies and to their principals. However, they do not apply to solicitors conducting in-house work for an employer that is an authorised body. The employer will need to consider what insurance arrangements are made.
Solicitors providing reserved activities independent of their secondment, as freelancers, must have adequate and appropriate insurance.
Usually the liability of solicitors working in-house is covered by their employment contract and principles of vicarious liability. However, as noted above, solicitors placed on secondment through an LSB are unlikely to have a direct service contract, dealing with liabilities and insurance issues, with the client organisation they are placed with or be considered as employees for the purposes of the employment law.
Therefore, before undertaking an assignment you would be well advised to discuss insurance arrangements with the LSB or the recruitment agency and consider carefully potential exposure to claims.
Solicitors on secondment with an unregulated business providing advice on behalf of that business to the public (scenario 2) should check whether insurance policies of that organisation cover them against liabilities arising from possible claims by members of the public.
You may be held personally liable for losses as a result of your work if the organisation you work for is uninsured or is not adequately insured or if you have made personal guarantees.
Additional important insurance considerations arise in scenario 3, where a solicitor is seconded from one SRA regulated organisation to another to provide legal services to clients of the second organisation.
For more information see the SRA’s guidance on adequate and appropriate indemnity insurance.
While this model of practice can offer many benefits in terms of flexibility, gaining valuable work experience and advancing in your career, like with any other work, if you’re considering practising in this way you should do your due diligence to ensure that the placement does not compromise your statutory professional obligations.
Before taking up a secondment, you’ll need to examine which of the three scenarios described above applies, because this will determine the regulatory and compliance requirements.
You should also satisfy yourself whether in your particular circumstances your advice will be privileged when providing advice to the client business, and advise the client accordingly.