Most City firms would welcome a new type of self-regulation being introduced by the Solicitors Regulation Authority, but two ‘major City firms’ have said they would probably shun the new system, research seen exclusively by the Gazette has found.

Authorised Internal Regulation (AIR) was proposed by Lord Hunt of Wirral in his Law Society-commissioned review of regulation, published last year. The system currently being developed by the SRA, which will apply to any firm that the SRA deems fit, closely resembles that model.

AIR effectively means allowing firms to regulate themselves through adherence to a set of core principles, and was expected to be welcomed by most major firms. However, according to a survey by Liverpool risk management law firm Legal Risk, two top 30 City firms have said they do not anticipate taking it up if it becomes available.

Nearly a third of the top 100 firms and half of the top 30 firms said that they would take up AIR if they had the option, while 48% of the top 100 and 35% of the top 30 said they would ‘probably’ take it up, the survey found.

However, 14% of the top 100 and 10% of the top 30 said they would be ‘unlikely’ to take up AIR.

Legal Risk partner Frank Maher said: ‘The obligation to tell the regulator everything under the internal regulation regime could mean admitting that you have made some seriously horrible mistake.’

The SRA is already piloting a new approach to regulation with City firms Allen & Overy; Ashurst; Clifford Chance; Freshfields Bruckhaus Deringer; Herbert Smith; Linklaters; Lovells; Macfarlanes; Norton Rose; Slaughter and May; and Travers Smith.Risk managers at 57 of the top 100 firms responded to the survey, including 21 at top 30 firms.