The following article has been extracted from The Law Society Gazette:
More than 18 months after promising a new era of simplified regulation, the Solicitors Regulation Authority yesterday unveiled the initial form of ambitious plans to simplify its hefty handbook and code of conduct.
The regulator has opened a 16-week consultation on new separate codes for solicitors and firms. Its proposals include giving greater freedom for solicitors to deliver legal services outside regulated firms.
Chief executive Paul Philip said: ‘We want to move away from complex rules and unnecessary bureaucracy – bureaucracy that costs money and needs continuous updating.
‘Some of the current rules are out of step with a legal market that is rapidly changing. We plan to give solicitors more freedom to work outside regulated firms. That will give the public more choice, increasing access to high-quality legal services at a price they can afford.’
The regulator is consulting separately on a shorter set of accounts rules. Its consultation document states that the accounts rules have not been ‘properly reviewed’ for nearly 20 years.
The document states that the length and complexity of the current accounts rules ‘makes it difficult for new entrants to understand what is required’. Meanwhile ‘while many existing firms find themselves in technical breach of the rules in circumstances where there are no real risks to client money’.
Under the proposals, the definition of ‘client money’ would be narrowed to allow money paid for fees and disbursements for which the solicitor is liable, such as counsel’s fees, to be treated as the firm’s money.
Money held for payments for which the client is liable, such as stamp duty land tax, will continue to be treated as client money and, therefore, be required to be held in the client account.
The regulator also proposes to provide an alternative to the holding of client money through the introduction of ‘clear and consistent safeguards’ around the use of third-party managed accounts as a mechanism for managing payments and transactions.
When asked what the benefits to the client would be of some money being less protected, SRA executive director Crispin Passmore told a media briefing yesterday: ‘The lower cost of legal services – because there isn’t the cost of running a protection scheme around it.’
Passmore said he did not see ‘widespread’ evidence of solicitors and firms taking clients’ money and not doing the work, adding that there were ‘other ways’ clients could protect themselves – for instance, paying by credit card.
Both consultations close on 21 September. The second phase of the regulator’s consultation, which focuses on the practice framework rules and authorisation rules, will take place later this year.
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