Freelance solicitors working outside a regulated firm will not be required to meet minimum levels of insurance cover, the Solicitors Regulation Authority has confirmed.
In its consultation response to the second part of its Looking to the Future report, the SRA said freelance solicitors – as well as solicitors working in authorised firms – will be required to have in place ‘adequate and appropriate’ indemnity cover. They will have to explain to potential clients they are not covered by minimum terms and conditions of professional indemnity insurance.
The Law Society has responded this afternoon by calling on super-regulator the Legal Services Board to throw out the plans. Chancery Lane warns that they will create a complex, multi-tiered system of regulation that will make it more difficult for consumers to make informed choices.
The SRA said it introduced the insurance provision after respondents - who included the Law Society and Legal Services Consumer Panel - expressed concerns about PII issues during its consultation.
The proposed model effectively allows freelance solicitors to operate on the same model as barristers who are attached to chambers and share back-office functions.
The regulator has also extended a three-year practice requirement to freelance solicitors who wish to provide reserved legal services without being authorised as a sole practitioner. This was again following feedback in the consultation.
The new SRA code will allow freelance solicitors to hold limited categories of money from clients in their own name, and the client must be told in advance where and how the money will be held.
The SRA response states: ‘We believe the potential benefits of increased flexibility for both freelance solicitors and their clients mean we should proceed with the proposal. It is artificial and disproportionate to force those solicitors who are genuinely working on their own into the same regulatory model as a firm that may employ hundreds of people. It increases costs for those individuals and these costs are likely to be passed on to clients.’
The regulator said it had not bowed to calls from some people to broaden its proposals, for example by allowing solicitors to have employees. The new provisions are intended to apply to genuine freelancers and not those running a firm employing others or who seek to disguise their firm using these arrangements.
It is confirmed that clients of these practitioners will have access to the compensation fund and will be subject to new rules about publishing details on prices in specific areas and complaints procedure.
Reforms are underpinned by a simpler set of principles, codes and rules for solicitors and law firms, which at 130 pages is at least 300 pages shorter than the existing handbook.
Law Society president Joe Egan said: 'We urge the LSB as the oversight regulator to consider the best interests of the public as well as the globally recognised high standards of the UK legal services and reject the SRA’s damaging proposals to alter the rulebook . The changes proposed would create unnecessary complexity and confusion, making it much more difficult for consumers to reach informed choices about legal services. They may also put consumers at risk and ultimately undermine trust in legal services.'
He added: 'We applaud the SRA for recognising the folly of proposals to allow newly qualified solicitors immediately to set up shop unsupervised, even if they still hope to see solicitors working freelance, with neither a firm over their head nor the badge of sole practitioner and the protections they bring. We believe that regulations should encourage and promote high standards of practice.'