The contrast between Charles Plant and his predecessor as SRA board chair, Peter Williamson, is marked. Mettlesome intellects both, of course, but Williamson's restless, staccato intensity has been supplanted by a measured - perhaps even slightly aloof - circumspection.

If Plant has the demeanour of a seasoned consensus-builder (in front of a roomful of journalists, at any rate), this is probably just as well, given the scale of his challenge over the next 18 months.

The SRA board is charged not only with a root-and-branch overhaul of regulation that will see the Code of Conduct rewritten and aggressively pruned just three years after it was introduced; it must also prepare the regulator to be the principal - and perhaps only - licensing authority for alternative business structures (ABS).

What Plant has described as a legal 'big bang' will be heard on October 6 2011, when the new code will come into force on the same day that ABSs are allowed to obtain licences.

To say the 16-strong board (eight solicitors and eight lay) has its work cut out is no exaggeration; especially since only three of its members survive from the ancien regime. Thirteen new members took their seats on 1 January.

Moreover, the board has to rebuild bridges as well as erect new ones. The facts are stark. Over three-quarters of law firms believe the regulatory burden on them is too onerous, according to Law Society-commissioned research, and under a third believe the SRA gives value for money.

At the same time, the SRA is busy striving to sustain an accommodation with the big City practices, which came out in revolt last year over monitoring practices which they variously described as both inexpert and too prescriptive.

No small matter too is the new practising certificate charging regime, which will shift more of the burden on to private practice, to the benefit of the employed sector.

Testing timesRegulators cannot expect to be popular, of course, and it is more important for them to win respect than to win friends. But solicitors can hardly complain that the SRA is not listening.

In the wake of Lord Hunt of Wirral's Law Society-commissioned review of regulation, the SRA is moving to an arms-length system of monitoring that appears very similar to Hunt's prescription for 'authorised internal regulation', a system of self-governance that will place the onus on firms effectively to regulate themselves. That will mean less red tape, but not lower standards. Solicitors as professionals will be expected to demonstrate their fitness to practise through adherence to a new set of core principles.

Plant is well aware that all this sounds counter-intuitive. We know what the City's own 'big bang' ultimately bequeathed - a free-for-all that saw the Financial Services Authority come to regard its constituents as clients to be satisfied rather than businesses to be regulated in the public interest.

Isn't principles-based regulation - or 'outcomes-focused regulation' as the SRA prefers to describe it - in disrepute?

Plant naturally says not, making the point that targeted and risk-based regulation must not mean 'light-touch' regulation. What matters is how sound the principles are and how they are applied. In that regard he alludes to last month's publication by FSA chief executive Hector Sants of the City regulator's own new 'conduct regulation' strategy.

At Canary Wharf too, the regulator's new approach will be based on early detection and intervention based on risk analysis, ending a system of 'reactive' regulation under which the FSA waited for evidence of malpractice to emerge before making itself busy.

As one begins to totter under the burden of too many high-flown abstract nouns, however, one must ask what all this will actually mean for solicitors.

'The FSA announced that they were going to significantly increase their capacity on the assessment of risk, recognising that they hadn't got it right,' explains Plant. 'One of our fundamental challenges is to increase our capacity [in this area]. That takes us to the point of assessing the degree to which we should be seen as verifying the viability of law firms - the way in which they might initially be formed. Anyone can prepare a business plan. The real issues are: is the cash in the bank?; is the work in progress being billed?; and so on.'

So when someone sets up a law firm, will the SRA take it upon itself to check its credentials?

'Insurers will ask for a business plan to satisfy themselves,' says Plant. 'But we certainly need to devise some tests that will enable us to assess the viability of a law firm. But it's also a process that has to continue after a firm has been created. The question for us is how are we going to do that. KPMG is assisting, and our proposals will come out later this year.'

One such proposal, already floated, is that law firms should be obliged to tell the regulator when their solvency is in doubt. It is of course an offence for a company director knowingly to allow a business to continue trading while insolvent.

Says Plant: 'In creating an altogether more constructive relationship with law firms, we would hope to arrive at a situation where some of them would feel able to come and discuss their problems with us and we could address them.

'You then come back to a fundamental point. At present we tend to get involved when the patient is in the accident and emergency department; somehow you've got to try to avoid that. If we have to intervene and close down a firm, on average it costs us £60,000. It would be far more sensible to apply some of those funds to assessing firms that might cause us problems in the future.

'The difficulty is to identify those firms initially and then try to create a dialogue with them.'

One danger of scrapping a swath of detailed conduct rules is that the wheel is slowly reinvented, as firms seek clarity on what is and is not permissible. In other words, the guidance becomes so voluminous that it eventually comes to comprise another 'cookbook' of prescriptive rules.

The SRA is alive to the danger: 'One thing we won't do is offer "safe harbours" for law firms that come and ask for something to be approved,' stresses Plant. 'We are not geared to give people comfort before they embark on something. But we are going to give sufficient guidance as issues arise.'

In the City, the SRA's charm offensive is led by a pilot project with major firms, seeking to discern what their risks are and how firms manage them, so the regulator can evolve a more efficient system of supervision. But Plant stresses that this approach will not apply solely to the big commercial firms, but to 'all firms that we think have appropriate systems in place'.

This sounds much like the system of authorised internal regulation (AIR) proposed by Hunt - and indeed it is. 'Absolutely right,' says Plant. 'Hunt also said that what we need to do is show how a good firm should operate and behave, rather than spend our time working out what to do with firms that hit our radar screen for other reasons'. Or, as Law Society president Robert Heslett recently put it: 'The benefit of AIR is that it would offer a considerable incentive for effective compliance and rigorous risk assessment in the shape of reduced routine intrusion from the regulator'.

Corporate regulationOne-time Cabinet minister Lord Hunt engaged in a smart piece of triangulation when he endorsed the thrust of former senior civil servant Nick Smedley's subsidiary report on the City.

Smedley sparked fears that the profession could be divided, by recommending the creation of a substantially autonomous regulator for corporate firms with its own high-profile - and highly paid - figurehead. In recommending that self-governance could potentially be rolled out profession-wide, Hunt deftly circumnavigated this hazard.The SRA has since established a corporate regulation unit based off Cannon Street and is interviewing for a senior figure to head it. They will be expected to have 'significant experience at partner level within large City law firms'. No salary is disclosed, though the post is 3-4 days a week. Two 'relationship managers' are also sought to work alongside this individual.

One raises half an eyebrow at this, given that City partners commonly earn sums far in excess of what a regulator (however senior) takes home. But Plant says: 'I think there are a lot of people in the City who have done very well over the years who want to do something different. Some might say "I want to go off and play golf all day", but others might think "it's a new challenge and a great opportunity to help develop City regulation". And, of course, many partners have left City firms over the last two years. It's not going to attract anyone who's simply interested in money, that is plain. In the Law Society group, of which we are part, there are pay scales obviously.'

The appointee will report to Samantha Barrass, herself formerly of the FSA, who was recruited last year to head the corporate regulation project. She has recently been promoted to executive director, regulation, as part of a management restructuring.

The executive team at the SRA now comprises: chief executive Antony Townsend; Barrass; chief operating officer Mike Jeacock; David Middleton, executive director, legal; and a soon-to-be-recruited executive director of resources, finance and board support.

Some solicitors have voiced their dismay that a new Code of Conduct is coming so soon after the current code came into force. But the timing is surely inevitable if there is to be a 'level playing field' come October 6 next year, and traditional law firms and ABSs are to abide by one set of principles and rules.

The Legal Services Act envisages competition among regulators, which appears a curious concept since it at least implies the potential for a 'race to the bottom' - which is anathema to the SRA. However, Plant is sanguine: 'You do have to ask who else is going to apply to regulate ABSs,' he says. 'The Institute of Legal Executives has said it is not interested in doing it at this moment. I can't believe the licensed conveyancers are going to do it.

'The Bar Standards Board does not regulate entities but individual barristers. The issue for them is should they become an entity-based regulator and then, in practice, they could regulate ABSs. But I don't think they are going to do that.'

A non-solicitor who has a stake in a law firm will have to pass a 'fit and proper person test', though precisely how this will apply has yet to be determined. In the case of a law firm that floats on the stockmarket, for example, shares will be changing hands all the time. There will have to be a disclosure threshold.

At the same time, an ABS must have two 'officers'; one a head of legal practice, who must be a solicitor, and the head of finance, who need not be. Again, the SRA will decide what standards they must follow.

It would seem that there is also more to do in the area of practising certificate fees. This issue seemed to be settled in February when the SRA approved a new charging regime, under which 40% of the overall PC costs will be paid through an individual fee and 60% through a firm-based fee.

This will shift more of the PC fee burden on to private practice, benefiting the employed sector. However, some continue to lobby for further change. Local government lawyers, for example, are demanding an 80/20 split.

Says Plant: 'We never said 60/40 and that's it. It's possible that could change, but we have to start somewhere. Some people in the City say too much of the burden is now falling on them. But I would counter this by saying that most of their clients are large corporates, whose PC fees are being reduced.

'Second, it's important that commercial lawyers recognise they are part of a great profession, and a significant part of that profession is providing a social service. And if those smaller firms providing that social service cannot in truth pay much more, I don't see why the commercial firms shouldn't pay an appropriate fee.'

And that's the point, one supposes. This is one profession. And notwithstanding an unprecedented revolution in the delivery of services it must remain so - however severe the strains on the ties that bind.

  • The SRA is holding a series of roadshows on the future of regulation from 25 May to 24 June.