City lawyers have published a scathing critique of the SRA’s plans to overhaul practising rules - while a respected compliance expert claims the proposals would open the door to criminals.
The City of London Law Society said proposed changes to the solicitors’ handbook outlined in the ‘Looking to the future’ consultation could damage the profession and create additional risks for consumers using unregulated firms.
The organisation, representing 58 member firms and 15,000 solicitors, said the reputational damage was not a risk worth taking in return for satisfying unmet legal need.
It warned that the handbook proposals (coupled with training reforms) could lead consumers and competitors to ‘form/exploit the impression that there is nothing special about being a solicitor – that solicitors are just another service provider’. This ’could be damaging to the perception of the profession as a whole, including City/commercial solicitors internationally, and therefore the strength/reputation of English law globally,’ it added.
The CLLS response also hits out at the SRA’s consultation document, saying member firms found it ‘hard to decipher’ and that it did not address the substance of the proposals until halfway through.
The response points out there is already a study of the legal services market underway by the Competition and Markets Authority and it questions why these changes are proposed now when the CMA is yet to provide a final report.
Under the SRA’s plans, the City group says clients will lose their legal privilege when consulting with solicitors in unregulated firms.
It may also create an uneven playing field where accountancy firms, consulting firms and foreign law firms employing solicitors would compete with traditional law firms for unreserved work while having the benefit of lighter regulation.
On supporting compliance with the code of conduct, the CLLS says it is for representative bodies such as the Law Society - not regulators - to issue guidance or case studies the profession might find helpful.
The notion of a shorter code comes under attack: ‘Simplification for its own sake can be dangerous – whilst superficially attractive, reducing the amount of text to read and recall, the introduction of new terminology just to reduce the number of words can easily create ambiguities’.
The CLLS added: ‘We are concerned that the code for solicitors will not contain enough detail to support individual solicitors in unregulated entities who are the ones most at risk of challenges to their professional requirements.’
Most City firms said they are not interested in creating separate businesses to ‘hive across’ unregulated work, saying clients would not appreciate reduce protections.
The CLLS joins a succession of bodies raising concern about changes to the handbook, including the Law Society. Today the Junior Lawyers Division has also weighed in to voice concerns about the impact of the plans on less experienced members of the profession.
Meanwhile, Frank Maher, a partner at north west firm Legal Risk, warned that the proposals could facilitate bogus law firms controlled by criminals.
‘Under the proposals for change as currently framed, anyone could own a law firm, even someone with a serious criminal record,’ said Maher.
‘Although they would not be allowed to offer the full range of services, the changes would make it difficult, if not impossible, for buyers of legal services to know whether or not the solicitor advising them was covered by professional indemnity insurance and the solicitors’ compensation fund, as these protections would not apply to the new-style alternative legal service providers.’