The question of how the Law Society should deal with the new types of practice soon to be permitted to solicitors – the so-called freelance solicitors, and solicitors in unregulated entities - is a difficult one.
To recap, last November the LSB approved handbook changes put forward by the SRA which introduced new permitted types of working conditions for solicitors, with the new rules due this summer. The Law Society has consistently and strongly opposed the changes.
Freelance solicitors will be able to provide reserved services without the need to be authorised as a recognised sole practice or to work through a regulated firm. This is subject to conditions such as being self-employed, being engaged directly by a client, not having any employees and not practising through a service company. Such solicitors must have three years’ practising experience for reserved activities only. For the rest, they will be able to deliver non-reserved work without any practising experience.
They will not be able to hold client money (except for payments on account of costs and disbursements). They will be required to maintain ‘adequate and appropriate’ professional indemnity insurance cover for both reserved and non-reserved work, though they will not need to comply with the minimum terms and conditions. Their clients will have access to the Compensation Fund.
As for those solicitors who will be able to deliver non-reserved services to the public from businesses that are not regulated, they will be subject to practice restrictions, and cannot provide reserved activities nor services which are currently regulated, such as immigration or claims management (unless they are separately regulated by the appropriate authorities). Such solicitors will not be required to hold professional indemnity insurance, nor be allowed to hold client money in their own name, on behalf of the businesses they are employed by.
It is obvious that such models of practice will remove crucial client protections, such as levels of professional indemnity insurance that consumers have come to expect from solicitors.
Given that these types of practice are about to arrive, how should the Law Society respond? Please note that the views that follow are mine alone.
Solicitors who choose to take advantage of the new types of practice will remain solicitors, and therefore our colleagues. I believe that the Law Society should support them in a comparable way to the way it protects our current membership. It is true that there will be two categories of solicitor – those who work within the present framework of well-established levels of consumer protection, and those who do not. The Law Society will have to become a many-headed beast and encompass all solicitors within its embrace.
The Law Society already does that. There are currently groups of solicitors with different interests to those in private practice. Solicitors in commerce and industry are an example - without implying that such solicitors share characteristics with the two new categories soon to be permitted. But, unlike in our jurisdiction, in-house lawyers are seen as a different group by many bars abroad and are not permitted to be members of those bars on the basis of their perceived lack of independence – given that they are employed by their client, their conflicts of interest are perceived as too strong.
Yet the Law Society has never had a problem representing employed solicitors along with private practice, and indeed takes pride in it, sponsoring the In-house Division among its communities. The latest statistics show that just over 22% of the profession works in-house, nearly a quarter, and the sector is growing faster than private practice.
We should not in any case assume that all the solicitors who will take advantage of the new categories will automatically opt for the lowest consumer protections. Many, maybe most, may choose, for instance, to take out the levels of professional indemnity insurance demanded of the rest of private practice. The Law Society could issue best practice guidelines for the new sectors, and information for the public on what types of solicitor now exist, and how the protections they offer vary.
We all know that much is changing around us, and that the Law Society has to stay nimble and proactive to surf the wave. I have already spoken about the growth in-house. Similarly, the number of ABS firms has increased from 282 in 2014 to 718 in 2018. 50 of the group which makes up the largest 200 firms have now adopted ABS status. And, interestingly, the proportion of PC holders shown as not attached to any organisation has risen from its historic 6% to 12%. This group may already contain solicitors in a similar position to freelance solicitors, though presumably with the required protections.
So the two newcomers will join an already varied profession, and the Law Society should be prepared to manage their integration.