Lawyers could face a ‘regulatory ambush’ if a radical overhaul of the solicitors’ rulebook goes ahead without a ‘change in culture’ at the profession’s regulator, the Law Society has warned.
In a response to the Solicitors Regulation Authority’s Architecture of Change consultation, which closed last week, Chancery Lane said it has ‘substantial concerns’ about the proposals and the regulator’s capacity to introduce them on such a short timescale.
The SRA is planning to introduce so-called ‘outcomes-focused regulation’ to coincide with the next phase of Legal Services Act 2007 reforms this October. The new regime will be based on broad principles rather than the current detailed rulebook, and is intended to give firms greater freedom in how they comply with their regulatory obligations, with the onus on self-reporting.
However, the Law Society said it had ‘serious concerns about the SRA’s capacity to implement the changes in such a short timescale’, warning that if the new system is imperfectly designed or implemented, ‘the consequences could be grave, not only in terms of cost but also [in] reputation at home and abroad’.
The Society said: ‘We do not believe that it is in the public interest for a new system of regulation to be implemented until the SRA has satisfied itself and the profession, that the system… is robust and fit for purpose.
‘While we recognise that the SRA has made progress in changing its organisational structure and is implementing a process of staff assessment and review, we believe that the change in [the SRA’s] culture required to implement OFR successfully cannot be achieved in the time allowed.’
It continued: ‘In order to establish confidence, there would need to be palpable evidence of change [at the SRA], and, as yet, there seems to be little current evidence of this under the existing system of regulation. To seek to regulate in an outcomes-focused manner, with the SRA’s current culture and approach to supervision and enforcement, is likely to result in "regulatory ambush". This, in turn, would cause loss of trust between the regulator [and] the regulated community.’
The Law Society also raised specific concerns over the SRA’s failure to clarify the meaning of its proposals in relation to conflicts of interest, which is ‘a matter of crucial importance’ to both the profession and clients. It said it was not clear whether the proposed new rules would allow a conveyancing solicitor to act for both buyer and seller.
An SRA spokesman said the Law Society’s submission would be considered together with other responses. The regulator aims to publish its final proposals in April, giving solicitors six months to familiarise themselves with the new regime before it comes into force.
For details of the SRA’s proposals go the SRA website.