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 Key rule changes

The 14th edition of the SRA Handbook went live on 30 April 2015. The changes are largely administrative and will not have a material impact day-to-day for most firms. Advocates should note that the transitional arrangements under the Higher Rights of Audience Regulations have now expired and that the Quality Assurance Scheme for Advocates (QASA) now looks to be set to move towards implementation. There’s a more in-depth note of the changes available on the SRA website.

Looking ahead to November however, big changes are expected, including:

  • well over one in ten law firms will no longer need to obtain or deliver an accountant’s report. Firms which, during an accounting year, hold an average client account balance of £10,000 or less and never in excess of £250,000, will no longer need to deliver an accountant’s report. In addition, accountants will no longer need to ‘qualify’ a report unless it is felt that the rule breaches put client money at risk. This is in addition to earlier changes which removed the need to deliver to the SRA unqualified reports and the removal of the report requirement where only legal aid client money is being held;
  • the removal of the prohibition on law firms working alongside or investing in quasi-legal service providers. Instead, firms and partners involved in ‘separate businesses’ will need to give certain information to clients about the status of the separate business to make clear that work with any connected business is not SRA regulated;
  • the relaxation of accounting rules which apply to ‘overseas practice’;

The detail of the changes proposed for November has been revealed by public Board papers (June and July 2015) published on the SRA website.

New consumer regulations will also mean changes to information provided to clients about the Legal Ombudsman. Specifically, firms must provide the name and web address of Leo in their terms of business and on the website.  In addition, certain information needs to be provided to clients in a specific form at the end of a firm’s internal complaints procedure. The requirements of the new consumer regulations are similar to existing complaints requirements but (rather frustratingly) not identical. Firms will need to consider both the regulations and the rules. Further guidance is available on the SRA website.

Latest guidance, guides and warnings

  • the SRA has expressed concern that legal aid lawyers may not be acting in the best interests of the client should the protocol issued by the London Criminal Courts Solicitors Association (Protocol Phase 2 The Crown Court) be followed “without fully considering the circumstances of each individual client”.  The SRA appears to be particularly concerned about the ‘no returns’ policy and creating limited pro bono retainers.  On the latter, the SRA has warned that it is likely to be in the client’s best interests to instruct another firm able to act for him or her fully and to apply for legal aid;
  • the SRA has updated guidance on offering inducements to include details of the outright government imposed ban on doing so in personal injury cases;
  • the SRA has warned that if money is missing from the client account then clients should be advised of this and costs should not be taken until the shortfall is made up.  The SRA has also highlighted the conduct duty to replace such monies, however the problem arose;
  • the SRA has published guidance and case studies on its new rule requiring “appropriate” PII. Adopting a tougher line than earlier indications, it says each client should know if liability would exceed PII and even then significantly exceeding the limit may still be inappropriate;
  • the SRA has described some systems which firms could use to safeguard against the increasingly prevalent attacks on law firms by fraudsters. These include a policy on how to deal with requests for banking details and two-step client verifications where large sums are to be paid out on a client’s behalf;
  • the Law Society has published a new practice note on what to do if a complaint is raised with Legal Ombudsman and updated its notes on outsourcing and publicity;
  • the Information Commissioner’s Office (ICO) has warned about the insecurity of fax machines following a case in which sensitive information was sent to the wrong person.

Tribunal trends

The latest SRA Risk Outlook has set out 8 ‘priority risks’  which the SRA is most concerned about.  It includes invaluable case studies explaining where things have gone wrong in real life disciplinary cases in the key areas: bogus law firmsmisuse of client moneyquality of service and ‘vulnerable’ clientsinformation security and cybercrimelack of diversityfailure to maintain professional independenceintegrity and the duty to the court and anti-money laundering systems. The SRA has taken steps to publicise in particular the information security and quality of service issues. The case studies highlight how easy it is for serious problems to arise in these areas.  The Law Society has now published a very helpful and detailed practice note on working with vulnerable clients.

Elsewhere, Legal Futures has reported a ‘massive increase in the number of lawyers disciplined by their professional bodies for breaking the rules on money laundering’, in accordance with figures contained in a Treasury report. Separately the SRA has publicised the prosecutions of a number of solicitors prosecuted at the Solicitors Disciplinary Tribunal for failing to close their firms properly. The SRA has urged firms to have an ‘exit strategy‘ in place.

Key dates

The SRA has published its fee policy for the 2015/2016 practising year. It sets out the fees which individuals and firms will be required to pay during this year’s renewal exercise, which will run from 1-31 October 20015. The SRA has urged lawyers to keep their mySRA information up to date and highlighted that sole practitioners will this year be moved over to the recognised body entity regime. Finally, there will be no keeping of the roll exercise this year for non-practising solicitors.

Important information about these updates

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