The oversight regulator today rubber-stamped controversial reforms allowing solicitors to work as freelancers without indemnity insurance.
The Legal Services Board considered there was no reason to refuse the SRA’s application to relax rules on solicitors working outside regulated bodies.
From November, only SRA-authorised bodies and their principals will need to hold professional indemnity insurance that meets the regulator’s minimum terms and conditions. There is no requirement in the proposals for solicitors who provide unreserved legal activities to hold any PII, while solicitors providing reserved activities must take out ‘adequate and appropriate’ cover.
The Law Society said consumer and professional views have been ignored, while expressing concerns about the LSB’s ‘lax approach’ to regulation.
The issue is further clouded by the SRA having failed to publish its draft guidance on what will constitute ‘adequate and appropriate’ insurance, although the LSB has had sight of the document and says it will provide more clarity to solicitors unsure about the new requirements.
In its summary of the decision, the LSB said the changes ‘do not meet the refusal criteria’ stipulated by the Legal Services Act 2007.
The oversight regulator said it expects the SRA to publish guidance in advance of implementing new standards and regulations from November.
Addressing concerns about scrutiny of freelancers, the LSB said self-employed solicitors will have to notify the SRA of their status, which will in turn be listed on the SRA register.
The decision notice added: ‘The SRA will therefore be able to monitor those solicitors and take individual action as necessary, whilst monitoring general impact and trends.’
The LSB also noted that the SRA halted plans to restrict access to the compensation fund for clients of self-employed solicitors entitled to provide reserved legal services. The SRA has confirmed that these clients will now have access to the fund where their solicitor has failed to account for funds.
Law Society president Christina Blacklaws said the organisation is 'hugely disappointed’ that the LSB approved the rule change, not least because the crucial draft guidance is not yet in the public domain. ‘If risks emerge further along the line the LSB will – not for the first time – be in a position where it is unable to revoke its approval,’ she said. ‘That’s seriously poor practice from a regulator that’s meant to hold other regulators to account.’