The Solicitors Regulation Authority has decided against establishing a semi-autonomous regulatory arm for big City and other large corporate law firms, a key recommendation of the landmark Smedley report. The regulator said this is ‘unnecessary’ because of its developing work programme, which includes opening a London office and joint working with leading firms. Former senior civil servant Nick Smedley was commissioned last year by the Law Society to review corporate law firm regulation as a ‘sub-strand’ of the wider Hunt review (see page 2).

His report recommended the creation of a London-based Corporate Regulation Group at the SRA, headed by a ‘very senior and highly experienced lawyer with a corporate and commercial background’. The new CRG should have ‘considerable autonomy’ under the Law Society umbrella, he proposed, with control of recruitment, staffing and pay packages. Smedley said the SRA ‘has not paid staff at rates which would attract individuals with the specialised experience which it absolutely must recruit to operate effectively within this sector’.

In a statement, the SRA said creating a ‘semi-autonomous division’ is ‘unnecessary’ given fresh initiatives in the sector. The SRA chair and chief executive will spend time in a new London office to facilitate ‘face-to-face’ dialogue with corporate firms and clients. A new client and practitioner panel supported from London will foster relationships with the sector and more staff will be recruited who have experience of financial regulation and City firms.

Some 11 firms have agreed to pilot new approaches to regulating the sector: Allen & Overy; Ashurst; Clifford Chance; Freshfields Bruckhaus Deringer; Herbert Smith; Linklaters; Lovells; Macfarlanes; Norton Rose; Slaughter and May; and Travers Smith.

Russell Wallman, director of government relations at the Law Society, said Chancery Lane is ‘confident that the SRA will carry through the implementation of the substance of Nick Smedley’s recommendations’.

Smedley recommended that the Society consider setting up a separate regulator for City and big corporate firms if the SRA does not comply.

David McIntosh, chair of the City of London Law Society, said he was speaking for all member firms when he welcomed the Hunt report and the SRA’s initiatives post-Smedley. ‘We are looking forward to working with a renewed SRA towards an improved and more effective regulation of the practice of corporate law, with the emphasis on internal regulation and compliance, not recrimination.’

He added: ‘As a past president of the Law Society and now chair of CLLS I am especially pleased that Lord Hunt, in adopting the thrust of Nick Smedley’s report and recommendations regarding corporate firms, has focused on how Smedley’s approach could be applied across the whole profession. My members want to be part of an entirely well-regulated and undivided profession.’