Bronwen Still and Derek Mitchell of the Solicitors Regulation Authority answer some important questions that have been asked about Rule 2 of the Solicitors Code of Conduct


Rule 2 of the new Solicitors Code of Conduct – which comes into force on 1 July – is designed to help you and your client understand and agree each other’s expectations and responsibilities.



Is there any real change between rule 2 and the Solicitors Costs Information and Client Care Code 1999 (CICC)?

Rule 2 retains at its heart the client care, complaints-handling and costs information provisions of the CICC, but groups with them other issues concerning your client relationship which had previously been dealt with in The Guide to the Professional Conduct of Solicitors. These other issues are: when you can accept and refuse instructions – matters generally concerning your retainer; contingency fees; commissions; and limitation of liability by contract.



The client care provisions in rule 2.02 look very similar to those in the CICC – are there any substantial differences?

The basic aim is the same, which is to make sure clients are given sufficient information about the conduct of their case, including the person responsible for their matter.



Rule 2.02, however, teases this requirement out in more detail and puts emphasis on agreeing service levels with the client and explaining what responsibility falls on you and what on the client. This section of the rule, along with the sections dealing with costs information and complaints handling, have been drafted in very simple language so that clients can read and understand them.



Rule 2.02 repeats the provision in the CICC allowing you to avoid some or all of its requirements if you can demonstrate it would be inappropriate to do so. This may be where you do repeat business for an established client or when asked to give one-off advice in a short timeframe. However, you should be cautious about using this derogation and it would be sensible to record your reasons when you do intend to rely on it.



I see I am required to explain any limitations or conditions resulting from any relationship I have with a third party which affect the steps I can take on the client’s behalf (2.02(2)(e)) – is this new and what does it involve?

This was added to the CICC fairly recently, so it is not new to the code. It is aimed principally at arrangements you may have with introducers of business and the constraints that these may place on your relationship with your client.



The guidance attached to the rule helps by explaining the type of constraints which require disclosure, those which do not and those which are improper and should not be entered into at all. In the latter category are any constraints which would impair your independence or ability to act in your client’s best interests. These would be serious and would likely involve a breach of rule 1 (core duties). For further information on referral arrangements and the need for transparency about such arrangements, you should refer to rule 9.



I am acting as executor of a will and am being bombarded by the beneficiaries with requests for information about timescales and costs – what obligations does this rule impose on me?

There is no obligation on you to provide information to the beneficiaries because they are not clients. However, it may be good practice to agree to provide some basic information to the beneficiaries. This will help to manage expectations and retain cordial relationships with the beneficiaries which may well be beneficial to you and them.



I am an in-house solicitor employed by a membership organisation and I provide advice and act for its members as permitted by rule 13 (in-house practice). I am unclear as to my obligations to give my clients – the members – client care and costs information.

The rule is addressed to ‘you’ and under section 23 (applications) ‘you’ includes all solicitors. On the face of it, the rule does apply to you. Its application is, however, subject to rules 2.02(3) and 2.03(7) and guidance note 23. Those rules allow you to modify compliance in relation to the giving of some or all of the client care and costs information where inappropriate. Guidance note 23 says that it may be necessary for you to comply with aspects of 2.02 when acting for someone other than your employer.



It is difficult to see how it would be appropriate for you not to comply at all with 2.02 because your member clients are likely to need the same kind of information as clients of a private practice. The position will be different with regard to the costs information, because you are prevented from charging in non-contentious matters, and in contentious matters your employer will be indemnifying the client against your costs should they not be recoverable from the other side. You may need to give some information, however, about what your client will need to do with regard to any third-party costs they are ordered to pay.



You are not required to give any information about complaints handling as 2.05 applies specifically to principals in a firm.



Chapter 12 of the guide was devoted to the solicitor/client retainer. Most of that has disappeared and is not covered in rule 2. Why? And do I still have to comply with the guide?

Provisions that covered essential conduct issues such as those dealing with retainer and limiting your liability by contract have been distilled into rule 2 – that is all you have to comply with. The provisions in the guide are repealed. Other issues covered in chapter 12 such as lien and the ownership, storage and destruction of clients documents are essentially matters of law rather than conduct. However, if you acted outrageously over either of these issues, you could find that you had breached rule 1 (core duties) by diminishing public confidence in the profession.



If I think my client’s instructions are being given under duress, I see that I need to be cautious about acting on them. If not satisfied that they represent the client’s wishes, I should refuse to act. Where do I go for further help?

This is always a difficult situation to assess and ultimately you will need to make a judgement on all the evidence before you as to whether the client is being pressured into doing something against their wishes. There is guidance attached to the rule which is designed to give help by highlighting situations where clients are likely to be vulnerable to pressure.



It is also urged that in these situations you see the client alone, so that the client is afforded the chance to talk freely with you. This should give you some opportunity to assess what your client wants and whether they are being subjected to adverse influence.



I see that rule 2.04 retains the previous prohibition on conducting work on a contingency fee basis. As a contingency fee agreement is unlawful in respect of contentious work, is this not just unnecessary regulation?

The SRA policy is generally to avoid unnecessary regulation and, therefore, not to replicate what appears clearly covered by the law. Where, however, there is evidence of risk to clients, a rule will be applied – as in the case of contingency fees – to ensure appropriate protection.



Under rule 2.06 of the code and rule 4(c) of the Solicitors Financial Services Rules, I am required to account to my client for commission received, but the former allows me to retain up to £20 without obtaining the client’s consent, which the latter does not. Which requirement takes precedence?

Where the commission arises out of regulated activities, you must comply with the requirements under the scope rules. The issue of commissions is, however, under review and may be the subject of a consultation in the near future, so keep an eye on the SRA website.



I am a partner in a firm and want to exclude personal liability for myself and my staff in the contract with my clients. Would the position be different if the firm became an limited liability partnership (LLP)?

Rule 2.07 deals with limiting liability by contract – and this is the first time this issue has been dealt with in a rule. The rule makes clear that you can only limit your liability as a partner if this is above the minimum level of cover required by the Solicitors Indemnity Insurance Rules for a policy of qualifying insurance.



Any such limitation must, however, be brought to the client’s attention in writing. The guidance indicates that it would be inappropriate to bury the limitation in terms of a business letter and that more will be required to make sure the client is aware of it.



You can, however, exclude all liability for your staff providing the partnership accepts liability.



If you convert your practice to an LLP, you will, as a member, be able to exclude liability, provided the LLP accepts liability.



Before taking any steps to limit the liability of yourself or any member of your firm, you must read the extensive guidance attached to rule 2.07. This draws attention to a number of important issues including the need to be sure you can comply with the law.



Bronwen Still is head of policy and Derek Mitchell policy executive in the Solicitors Regulation Authority’s professional ethics department