CONFUSION: regulator risks being at 'cross purposes' with firms


The Solicitors Regulation Authority's (SRA) failure to define what it means by a 'business model' could lead to confusion and even litigation, the College of Law's Legal Services Policy Institute claimed this week.



The institute claims that this lack of clarity could leave the regulator at 'cross purposes' with firms and even lead to judicial review.



Professor Stephen Mayson, director of the institute, said: 'As the market for legal services changes in the wake of competition, there is increasing talk about appropriate business models for the new landscape. It is apparent, however, that although the same term - 'business model' - is being used, it is not necessarily being used in the same way by everyone.'



The proposed regulations for legal disciplinary partnerships (LDPs) would allow the SRA to impose conditions on an LDP if it considers that there are any risks posed by its business model.



Mayson said: 'Neither law firms nor the SRA have a working definition of business models, but the SRA is planning to use the concept in LDP regulations. So how can either be sure what the other is proposing? There is a real risk that the regulator and regulated will end up at cross purposes - or even worse, judicial review'.



Mayson added that firms could spend a lot of time and money developing a complex ownership structure only to find that the SRA would not allow it. He said the regulator needs to spell out what structures and what combinations of services it will allow.



An SRA spokesman said: 'The SRA would almost certainly allow any business models that are legal and do not present risks to clients and the public.'



Rachel Rothwell