Last week I attended ARK Group’s first ‘SRA compliance for in-house lawyers’ conference. It was a really good day, with some very practical information and useful insights. In this article I’ve picked out just a few of the gems I took away from the day.
The future of legal services regulation
Crispin Passmore, Executive Director at the Solicitors Regulation Authority, gave a keynote presentation on ‘the future of legal services regulation’. It’s a bold headline, and Crispin didn’t disappoint. He outlined the SRA’s broad aims for the updated handbook:
- To make it more relevant for all solicitors, whoever they are and wherever they practise – with a code for regulated individuals and a code for regulated entities.
- To make it shorter, more flexible and longer-lasting – ditching the prescriptive detail so that constant revisions are not necessary (the 2011 handbook is now on version 16!).
- To provide more advice and guidance to help solicitors understand, interpret and comply with the rules – with toolkits and case studies.
- To clarify the rules around in-house solicitors working pro bono.
- To make it possible for in-house legal teams to offer non-reserved activities to other companies – to turn a cost centre into a revenue stream.
The SRA plans to launch a consultation on a draft of the new rules in summer 2016, with implementation no earlier than spring 2017.
The new handbook will be significantly shorter than the current version. As Crispin said, “regulation isn’t free,” and more rules means a higher cost to police them.
The question was raised whether the SRA would have enough detail in its streamlined handbook to identify a breach. Crispin’s answer was a firm yes: the majority of breaches relate to either the Accounts Rules or the principle of integrity. You could argue back and forth for a long time whether someone breached one bit of a rule, but it’s arguably much clearer-cut to say someone didn’t act with integrity.
In the period before the new rules are introduced, Crispin urged firms to make use of the SRA’s Innovate programme: “If there are things you want to do but regulation stands in the way, talk to us.”
Demonstrating compliance to the regulator
Pearl Moses, Head of Risk & Compliance at the Law Society, shared insights from her work with in-house teams around the country. She started by explaining that a lot of the regulator’s enforcement work is driven by client complaints – so there is typically more scrutiny of private practice than in-house. Of course, that’s not to say in-house teams should scale back their compliance efforts!
A recurring message from the conference was that in-house solicitors need to ensure their employers are fully aware of their own professional responsibilities as a regulated individual. Yet Pearl noted that in some cases she had observed less awareness by solicitors of their own regulator’s requirements than those of the body regulating the business.
Pearl urged in-house counsel to be clear with their employers about the standards expected of them as a solicitor, and to ensure that they always keep their own obligations front of mind, and especially when they come into conflict with ‘what the business wants’. Do “what works for you and what keeps you safe”.
She also reiterated the message that the SRA is not looking to second-guess solicitors or catch them out. It is looking for the “wilfully deviant”. The ‘show your working’ approach will help the SRA to follow why you acted the way you did.
Continuing competence for in-house solicitors
Amid much discussion of regulatory change, the new continuing competence regime that comes into force for all solicitors from 1 November 2016 was touched upon several times. Crispin came up with a great analogy to describe the move away from the 16 hours CPD approach: “rather than counting how many driving lessons you’ve had, we want to see you can pass the driving test”. It makes sense!
Clarity is a must, so a code of conduct that applies to individual solicitors needs to be distinct from the code for firms we regulate. Solicitors need to be clear about their personal obligation to be competent and ethical. Firms need to ensure they create the right culture and provide the right systems to ensure they deliver on their obligations. A simpler, clearer and a more user-friendly Handbook could help solicitors reconnect with the content.