A solution looking for a problem
The SRA's â€˜Looking to the Future' consultation risks creating unnecessary uncertainty for solicitors in traditional practices, especially in compliance roles, writes Michelle Garlick
Late last month, the Solicitors Regulation Authority’s ‘Looking to the Future – flexibility and public protection’ consultation closed. This was quite clearly a major piece of work for the SRA with the intention of redrafting the existing handbook in order to make it ‘shorter, clearer, and easier to use’.
The suggested changes to the handbook are arguably unnecessary, and there is a sense that the SRA is throwing the baby out with the bathwater. Evidence pointing to why such a radical overhaul of the handbook, the principles, and particularly the code of conduct is needed is distinctly lacking.
If anything, it is the other rules – not the code or principles – which make the current handbook large and unmanageable.Of course, the legal profession is changing and keeping one eye on the future is to be applauded, but the SRA has focused too heavily on unregulated businesses and in-house solicitors in this proposed reviewed handbook, leaving more traditional practices to wonder why they must face yet further changes to the way in which they are to be regulated.
COLPs and COFAs
So where do the compliance officers for legal practice and for finance and administration stand if the changes are introduced? Will the roles even remain?
While many expressed concern when the roles were first introduced, there are benefits of having a designated person responsible for risk within the firm and for reporting material breaches, so I would be very surprised if the roles were abolished.
But there is genuine concern among COLPs I have spoken to that making the code shorter and more vague will just create confusion, put a lot more pressure on COLPs in deciding what is compliant or not, and potentially increase not only costs but also the risk of enforcement action against those who have taken on the role of compliance officer.
The SRA has said that it will provide case studies and guidance to assist in understanding what firms’ and solicitors’ obligations are. Unfortunately, some of the examples included in the consultation were at best unhelpful and at worst misleading or wrong – the case study on cold calling, in respect of which the SRA has had to backtrack, being a case in point.
Case studies were promised when the roles of COLP and COFA came in, but the SRA’s website only has three examples of what is a material breach. Will the SRA deliver this time? The regulator is ideally placed to identify the areas which firms may find difficult to comply with or understand through, for example, the ethics helpline, its investigations, decisions of the Solicitors Disciplinary Tribunal, and COLP reports. Greater visibility, transparency, and information sharing will be needed from the SRA if the guidance is to
be of any assistance to compliance officers.
Vague language will also make it harder for firms to provide training, especially on who the code will apply to. It opens up the possibility of conflicts between the firm and employees in situations where the firm seeks to apply a universal standard across the board but an individual solicitor argues that it does not fit with their interpretation of their personal obligations. It will also add to the complexity of training non-qualified staff.
Ultimately, these proposals are a solution looking for a problem. Having assimilated outcomes-focused regulation, the 2011 code, and its several subsequent updates, the proposed revamp is unnecessary and unhelpful. In this instance, evolution, rather than revolution, is preferable.
The consultation closed on the 21 September so we will await the results with bated breath. It is certainly hoped by many in the legal profession (especially those in the more traditional private practices) that these proposals will be considered carefully and we won’t be left with a vague and shortened version of the handbook which creates more problems than it solves.
Michelle Garlick is a partner and head of Compli at Weightmans