Bronwen Still and Derek Mitchell of the Solicitors Regulation Authority provide a rule-by-rule introduction to the new Solicitors Code of Conduct


The Solicitors Code of Conduct 2007 comes into force on 1 July 2007. It will replace The Guide to the Professional Conduct of Solicitors, which was first published in 1960.



Since then, it has grown to deal with changes in practice, the law, the expectations of clients and the way business generally is conducted. This has led to an increasing number of sets of rules and codes which run alongside ‘principles’ of conduct in the guide, which also sets mandatory requirements. In short, the guide has become a confusing mix of material. The new code, therefore:

l sets clear, mandatory requirements as a single set of rules;

l begins those rules with a set of core duties defining the values which should shape the professional characteristics of a lawyer and which underpin all aspects of practice; and

l includes non-mandatory guidance which accompanies the rules – this guidance is there to help you apply the rules to everyday situations.



The key objective in drafting the code has been to identify where real risk to clients exists and to put in place an appropriate level of protection while avoiding unnecessary regulation. Another important objective has been to allow firms flexibility to make their own decisions about issues such as what is best for their individual clients in certain circumstances, for example in using the exceptions to the conflict rule.



What has changed?

The code represents more than an update of the guide. New provisions have been added, some familiar requirements repealed and others more subtly revised. All have been systematically regrouped and set in a new framework which is intended to be read as a coherent whole. This makes it impossible to do a comprehensive ‘like for like’ comparison with the guide.



There has been significant change in some areas – such as the supervision and management of a practice, and less change in other areas – such as client care. Over time, you will become more familiar with how subjects are now grouped. For example:

l Undertakings are covered in rule 10 (relationships with third parties);

l Limitation of civil liability by contract is dealt with in rule 2 (client relations); and

l ‘Contract races’ are dealt with in rule 10 (relationships with third parties).



Rule 1 – core duties

The ‘basic principles’ of professional conduct enshrined for 20 years in practice rule 1 have been replaced by six ‘core duties’ which deal with:

l Justice and the rule of law;

l Integrity;

l Independence;

l Best interests of clients;

l Standard of service; and

l Public confidence.



The importance of these cannot be overstated. They form an over-arching framework within which the other more detailed and context-specific rules can be understood, and fill the gaps where the other rules appear silent. The Solicitors Regulation Authority (SRA) intends to give greater prominence to the core duties in its regulatory activity, and to use them as an aid to raise standards – as is evident in the new duty dealing with ‘standard of service’ requiring you to provide a good standard of service to your clients.



Rule 2 – client relations

This rule groups together requirements currently found in the Solicitors Costs Information and Client Care Code, and other provisions dealing with your relationship with your client – such as the need to account to your client for commissions and ‘retainer’ issues. Note that the ban on illegal contingency fees is retained in this rule.



The ‘costs and client care’ provisions have been subject to minor change to make them clearer and more succinct. Limitation of liability by contract becomes a rule for the first time, but any limitation can only be above the compulsory minimum insurance level. Any agreement to limit liability must be in writing.



Rule 3 – conflict of interests

The new rules implemented in 2006 which brought radical change to the way conflicts of interest and the duties of confidentiality and disclosure are dealt with have been replicated in the code. In relation to conflicts, the main changes (as compared with the pre-2006 position) are:

l Conflict is defined and is limited to conflicts ‘in the same or a related matter’.

l The rule continues to prevent you or your firm from acting where there is a conflict or significant risk of a conflict – subject to two exceptions: where the clients have a substantially common interest; or in commercial situations where sophisticated clients are competing for the same asset.



Strict conditions apply to the use of these exceptions and the informed consent of each client is required. Note that information barriers cannot be used, even with your client’s consent, to allow you or your firm to act where there is a conflict except in the very limited circumstances where you act using the second of the two exceptions.



The provisions relating to conveyancing conflict are incorporated into this rule and remain largely unchanged. However, one of the exceptions permitting you to act where there is ‘no other qualified conveyancer in the area’ has been removed.



Rule 4 – confidentiality and disclosure

Again, the changes made last year are replicated in this rule. The main changes (as compared with the pre-2006 position) are:

l It is made clear that the duty of confidentiality will always override the duty of disclosure – beware that pleading the duty of confidentiality does not excuse a breach of the duty of disclosure;

l The duty of disclosure is limited to information of which you are personally aware – it does not extend to that held within your firm of which you are unaware;

l There is a new duty which prevents you from putting the confidential information of one client at risk by acting for another client where (a) that information is material and (b) the interests of the clients are adverse; and

l You can act using information barriers subject to strict conditions where confidentiality would be put at risk and where there would otherwise be a breach of this new duty, but read the rule and guidance carefully. Such information barriers are largely for sophisticated clients and big firms with the infrastructure to put them in place.



Rule 5 – business management

There are substantial changes which you should check now. One of the most significant is that the new rule repeals the transitional provisions in current practice rule 13. The main effect is that, if you are required under the new rule to be ‘qualified to supervise’, you must have completed 12 hours of management training by 1 July. This may particularly affect some sole practitioners.



Rule 6 – equality and diversity

Changes to this rule came into effect earlier this year. These are that it now covers age discrimination, addresses civil partnership and paternity rights, and clarifies the provisions relating to disability discrimination and reasonable adjustment. It also changes the duties in relation to implementing an equality and diversity policy.



Rule 7 – publicity

This rule largely carries over the requirements of the Solicitors Publicity Code 2001, but in a clearer form and accompanied by guidance on issues such as websites and emails.



The main change concerns the requirement to state on a firm’s letterhead that it is ‘regulated by the Law Society’, which will become ‘regulated by the Solicitors Regulation Authority’. This is effective from 1 July 2007, but either statement can be used until 30 September.



Rule 8 – fee sharing

Changes made in 2004 widened the categories of persons with whom solicitors could share their professional fees to include certain non-lawyers. In 2006, further changes were made to permit fee sharing with charities. Both are incorporated into the code.



Rule 9 – referrals of business

Changes made in 2004 to permit the payment of referral fees subject to conditions have been carried over into the code. There has also been some rationalisation of the disparate requirements attaching to the different types of referral arrangement. You will, therefore, need to check that your referral arrangements comply with the requirements of rule 9.



Rule 10 – relations with third parties

This rule draws together a variety of obligations linked by the need to deal with third parties in a proper manner. These include:

l Not taking unfair advantage;

l Administering oaths;

l Agreeing costs with another party;

l Undertakings (defined in rule 24); and

l ‘Contract races’



Rule 11 – litigation and advocacy

The Advocacy Code will be repealed and its essential requirements (such as obeying court orders and not deceiving or misleading the court) will be retained in this rule, along with other provisions currently found in chapter 21 of the guide.



Rule 12 – framework of practice

This rule sets out the types of business through which solicitors, registered European lawyers, registered foreign lawyers and recognised bodies may practise under the regulation of the SRA. Note that the code reflects the current statutory framework for the regulation of the legal profession. The changes proposed by the government in the Legal Services Bill – which would permit partnerships with members of certain other legal professions (such as barristers) and external ownership – are not yet law and may not be fully implemented for several years, so don’t jump the gun!



Rule 13 – in-house practice

In-house solicitors have always been subject to the same general principles of conduct as those in private practice – the code maintains this approach. The basic rule, which generally limits in-house solicitors to acting for their employer, is preserved (see rule 12 above) to ensure that the SRA can adequately regulate in-house solicitors within its current statutory powers. However, the exceptions – now contained in rule 13 – have been rationalised and expanded in certain cases, for example, in relation to employment in local government or by the Crown and non-departmental public bodies.



As with private practice, in-house solicitors must not be involved in business structures which are dependent on the coming into force of the Legal Services Bill because these are not permitted by the code.



Certain in-house solicitors will be subject to the new rule 5 dealing with business management.



Rule 14 – incorporated practice

This rule sets out the requirements which apply specifically to a recognised body and its members, directors, shareowners and employees. There are provisions which exclude non-lawyers from being members, directors or shareowners. Note that the administrative requirements for obtaining and renewing recognised body status are now separately set out in the Solicitors Recognised Bodies Regulations 2007.



Rule 15 – overseas practice

This rule is specific to overseas practice (defined in rule 24). It applies or disapplies the provisions of the rules in the code to overseas practice, and in some cases substitutes alternative provisions.



Rule 16 – European cross-border practice

This rule applies the provisions of the CCBE Code of Conduct to European cross-border practice, but only those requirements not replicated elsewhere in the Solicitors Code of Conduct.



Rule 17 – insolvency practice

This rule applies if you are an insolvency practitioner, but only when you accept appointments and act as an appointment holder.



Rule 18 – property selling

This rule sets out requirements for providing property-selling services through your firm to maintain equivalent standards to those required of non-solicitor property sellers.



Requirements for providing these services through a separate business are dealt with in rule 21 (separate businesses).



The rule also contains requirements which you must comply with if providing home information packs when the relevant legislation becomes effective. Again, these ensure a standard equivalent to that required of non-solicitor property sellers.



Rule 19 – financial services

This rule applies when acting in connection with the provision of financial services for clients, both through your firm and through a separate business. It ensures that your independence is preserved by continuing to prevent you from becoming an appointed representative (unless this is through your separate business which can be the appointed representative of an independent financial adviser).



You cannot have an arrangement which limits the advice or products you can offer except where this is in connection with mortgages and non-investment insurance policies. Note that the Solicitors Financial Services (Scope) Rules and Solicitors Financial Services (Conduct of Business) Rules are not repealed by the code and can be found on the SRA website.



Rule 20 – requirements of practice

This rule sets out the requirements for holding a practising certificate, and when and by whom reserved work can be undertaken. For the first time, it puts into rule form the legal requirement to hold a practising certificate and introduces a requirement to co-operate with the SRA and Legal Complaints Service.



Rule 21 – separate businesses

The purpose of this rule is to ensure that members of the public are not confused or misled into believing that a business carried on by you outside your practice is regulated by the SRA. It rationalises some of the requirements in the Solicitors Separate Business Code but is otherwise similar. The rule lists ‘mainstream’ legal services which must be carried on through your practice and other services which may be carried on through either your practice or a separate business. It sets out safeguards which must be put in place to ensure that your separate business is clearly identified as such to its customers.



Rule 22 – waivers

This rule gives the SRA power to waive the provisions of the rules with a number of fairly obvious exceptions. For example, there is no power to waive the core duties or the duty of confidentiality.



Rule 23 – application of these rules

The rules are addressed to ‘you’ and this rule explains that ‘you’ includes all individuals and bodies that are regulated by the SRA.



Rule 24 – interpretation

This rule explains the terms commonly used in the code. Note in particular that the definition of an undertaking appears here.



Rule 25 – commencement and repeals

This rule brings the code into force on the 1 July and lists those rules and other provisions that are repealed and those that remain in force. The Solicitors Accounts Rules and Solicitors Indemnity Insurance Rules remain in force. The conduct obligations imposed by virtue of the guide (8th edition, 1999) and Guide Online are replaced by the code. If you are unsure as to the status of any rules, guidance or related conduct material, contact the Professional Ethics guidance team. The Solicitors Recognised Bodies Regulations 2007 also come into effect on 1 July.



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