'When I use a word,’ Humpty Dumpty said, in a rather scornful tone, ‘it means just what I choose it to mean, neither more nor less.’

‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’

‘The question is,’ said Humpty Dumpty, ‘which is to be master – that’s all.’

With this passage from Through The Looking Glass, Lewis Carroll might have introduced the profession to outcomes-focused regulation (OFR), the advent of which is less than six months away.

Unlike previous professional rules, OFR has no rules, only principles, desirable outcomes and indicative behaviours. The regulator has omitted any firm indicators of the steps a solicitor should take to ensure they are compliant.

This, says the SRA, is trusting us as professionals to proactively review our businesses and the risks associated with them, and to choose business models designed to minimise or manage those risks to the best of the ability of the solicitors concerned.

Plan aheadIn this environment, it is vital to: plan ahead; assess the risks affecting our firms; develop written policies identifying those risks; and provide procedures to manage or minimise the risks. These policies must be reviewed and tested at regular intervals.

Part of the education campaign that the SRA has run for the past year has involved webinars explaining key aspects of the OFR system and the new supervisory experience in terms of relationship management and risk-based regulation.

These two concepts are crucial to achieving the SRA’s objective of delivering proportionate, targeted and effective regulation.

This new approach is, therefore, to be welcomed if it represents a fresh start to the SRA’s relationship with the profession.

The regulator’s resources will be applied by reference to a risk rating, to be assigned to all regulated entities, being a function of a formula: Risk = Impact x Probability.

In some firms, a risk may not be high, but a single breach may have a significant impact because of the size of the firm and the number of clients.

Thus the risk may be addressed through the SRA relationship manager assigned to the firm working with that firm to achieve an agreed outcome.

In other firms, relationship management may be ad hoc, leading to an agreed methodology to correct the breach and put in place systems to avoid such an issue arising again.

It would be refreshing if the SRA can deal with matters through relationship management, but this will require a degree of culture change, not only for the profession, but also for the SRA’s officers. The proof of the pudding will be in the eating in that respect.

Doing the right thingA worrying aspect is the reference in one SRA webinar to the profession satisfying the relationship manager that they are doing ‘the right thing’.

What does this mean? Are we not about to enter a Wonderland, where we shall find characters such as Humpty Dumpty and a debate about whether words or their meaning are the master of our profession?

A blended structure of principles and rules would have been of greater utility given the scope for varied interpretations by not only law firms, but also alternative business structures.

‘Transition Planning’, as the SRA puts it – or ‘Be Prepared’ as the Scout movement would have it – is the key to ensuring we remain compliant after 6 October 2011.

As I point out in an article for the latest edition of The Law Society’s Legal Compliance Bulletin (issue 12, March 2011) there are firms that may choose to opt for the more user-friendly regimes for regulation that are available to other professions.

Meanwhile, solicitors have some serious cultural, practical and philosophical adjustments to make in the way we run our businesses.

Tony Guise, is director of GUISE Solicitors Limited, a specialist law firm providing regulatory and compliance advice