Peter Williamson reviews the work of the Solicitors Regulation Authority's practice standards unit and explains how it can improve client care in law firms


A large slice of the profession will by now have received a knock on the door from our practice standards unit (PSU). Since it began work in 2001, more than 4,000 firms have been visited and the unit now has an established reputation with a track record of improving standards of practice.



So why should the regulator be carrying out these visits, which are not investigations or disciplinary in nature? Surely, with our risk-based approach, we should be concentrating our efforts on those firms that we know to be failing and letting down their clients?



The answer to those questions lies in the importance the SRA attaches to client care and protection of the consumer. While we keep a constant focus on the very serious dishonesty that warrants us using our statutory powers, these cases are thankfully few. However, there is a wider need for us be sure that the profession understands its obligations to clients and can meet their reasonable expectations.



It is not surprising that many firms greet news of a visit by the SRA with some degree of trepidation. However, these visits can provide firms with a real opportunity to review and improve their current working practices. How many firms can honestly put their hands on their hearts and say that every aspect of their practice, particularly client care and complaints handling, is exemplary, I wonder?



We recognise that most firms do want to comply with practice rules and welcome practical advice and support. And we know that visits from the PSU are effective. Our analysis shows that firms which receive a monitoring visit generate between 15% and 23% fewer complaints than they did prior to a visit. Firms that have not received a visit generated between 1% and 8% more complaints over a similar period.



So what should firms expect when the PSU team comes to visit? A typical visit will last two days and will cover compliance with the practice rules – which become the new Code of Conduct from 1 July. It will include client care and legal requirements in relation to money laundering and provision of financial services. The adviser will also review how the firm complies with accounts rules.



There will be interviews with a firm’s rule 15 or senior partner, and the adviser will review a number of client matters during the visit. The aim is to work with firms so that any issues identified can be dealt with and, if necessary, procedures improved. Poor systems can threaten the solicitor’s integrity and damage public confidence not only in the individual solicitor, but in the profession as a whole.



For the majority of the firms visited, we do find several minor weaknesses and breaches of practice rules and we are able to recommend – or require – corrective action. The second largest group is firms where we identify significant weaknesses and breaches, but where the firms are prepared to work with us to put things right. I am glad to report that the smallest group is those where we judge that disciplinary action may be necessary and formal referral is needed.



And what are the most common concerns our advisers find in client care procedures? At the top of the list is costs information. The importance of solicitors being open and clear to their clients about costs matters is vital. The new Code of Conduct makes it clear in rule 1 that you must provide a good standard of client care and work. The new rule 2 that deals with client care also places importance on giving the best information possible about the overall cost of a matter, both at the outset and as the matter progresses.



Other common failings are lack of information about delay, poor communication, use of language that confuses clients and poor complaints handling. Next are difficulties over the complex requirements of Financial Services Authority rules for solicitors who handle financial, investment and insurance matters, and failure to inform clients about supervision arrangements.



It was a report from the PSU that highlighted some of the shocking practice in relation to introductions and referral fees. It visited 135 firms to look particularly at referral arrangements, and the unit’s report on how things were operating on the ground caused real concern to the SRA board.



The unit found widespread failure to notify the clients about referral arrangements and the amount of payments; failure to check that introducers were providing clients with relevant information; and failure by firms to make their own six-monthly reviews of referrals. It was a dismal picture that prompted the ongoing campaign of enforcement of the rules on referral arrangements.



This kind of insight into what is going on in firms on a day-to-day basis is very important to the regulator. To judge from feedback, firms generally find a PSU visit a positive experience and find this style of monitoring both useful and constructive. Long may this continue.



Peter Williamson is chairman of the board of the Solicitors Regulation Authority