Legal Business Blogs

‘A giant opening for competitive forces’ – Controversial SRA handbook overhaul given green light as Passmore steps down

In a significant easing of practice rules, the Legal Services Board (LSB) has approved divisive plans by the Solicitors Regulation Authority (SRA) to allow solicitors from unregulated businesses to offer unreserved legal services.

Crucially, permitting solicitors outside of the SRA control to offer services means consumers could have no guarantees on insurance pay outs or compensation.

However, the liberalisation is a significant boon for solicitors at unregulated organisations, who will save money on overheads without the obligation to have professional indemnity insurance.

Graham Reid, a legal regulation partner at RPC, told Legal Business that the change ‘presented interesting opportunities for in-house lawyers and anyone who wants to compete with big law firms at a much lower cost base.’ He added: ‘This is a giant opening for competitive forces.’

LSB chair Dr Helen Phillips said she recognised ‘potential risks’ in the rule change but ultimately welcomed the move, citing benefits to access to justice and promoting competition.

But a statement by the Legal Services Consumer Panel put the onus on the LSB and SRA to ensure consumers ‘understand any accompanying reduction in consumer protection.’

It continued: ‘There must be no ambiguity in the communication to consumers prescribed by the SRA, to ensure consistency in messaging and standardisation.’

Law Society president Christina Blacklaws described the rule change as ‘a serious error’. She added: ‘A high street where different tiers of solicitor, with different levels of protections offer the same services to passers-by will make it more difficult for people who need legal advice to reach informed choices often at very traumatic moments in their lives, such as divorce and bereavement. Flexibility for practitioners should never come at the expense of protection and clarity for consumers.’

The shake-up of unreserved legal activities comes as part of yet another overhaul of the SRA Handbook, which will now take effect in April 2019. This stripped-down version includes two separate codes of conduct: an individual solicitor code and a firm code. In June, Law Society policy adviser Marzena Lipman warned the new codes would be ‘less detailed’ and ‘will not have the outcomes or indicative behaviours’ of the existing code. The existing accounts rules have also been simplified and shortened.

As the SRA pushed through its latest reforms, yesterday (6 November) it also announced an internal reshuffle which will see executive director Crispin Passmore leave at the end of the year.

Passmore has been with the SRA since joining from the LSB in 2014, but will use his departure to take some off before deciding on his next career move.

He was a key figure in the SRA’s education reform programmes, such as the proposed implementation of the Solicitors Qualifying Examination (SQE). In his absence, Richard Collins will lead on policy, education and anti-money laundering matters while Robert Loughlin will deal with enforcement work.

SRA chief executive Paul Philip commented: ‘Over the last five years, Crispin has played an invaluable role in making sure we regulate in a way that maintains trust in the profession, while helping create a modern, open legal market that benefits the public.’