‘Principles-based regulation means moving away from reliance on detailed prescriptive rules and relying more on high-level principles to set the standards by which regulated firms must conduct business.’ So said Lord Hunt in his report on legal services regulation, which advocated such a switch.

The potential benefits to practitioners are greater flexibility and easier compliance. But the SRA’s aim to introduce a revised regime by 2011 appears ambitious – and not least because the regulator will be sailing into the wind.

‘Principles-based regulation’ has not had a good press of late. It is now commonly taken to mean ‘light-touch’ regulation that turns the regulated into clients of the regulator. Indeed, the landmark Wigley report into the financial crisis recommended that the City should foot the bill for a new, more intense supervisory regime that would replace ‘principles-based’ regulation.

Lord Hunt argued that ‘principles-based regulation’ was not in fact the culprit in the financial meltdown; the principles were right, it’s just that too many firms ignored them and enforcement was inadequate. This merely underlines the difficult task facing the SRA of applying the concept to legal services. As Hunt said, principles-based regulation implies the exercise of judgement by both regulator and regulated, and a broad acceptance of those judgements. If the SRA cannot engineer that rapprochement, the danger is that a ‘cookbook’ of detailed rules follows by the back door.