Freelance solicitors: walking in the middle lane of the motorway?
The new â€˜freelance' solicitor model looks a lot like the current consultant status â€“ except it has none of the advantages for anyone, says Paul Bennett
Uber and the gig economy look certain to receive a legal flavour on 25 November 2019 with the introduction of a new model of working as a solicitor which is not currently permitted under the SRA regime.
The move will present a challenge to firms, and an opportunity for some individual solicitors, but at present the SRA proposals contain a fatal flaw.
They are in streaming terms more Napster than Spotify because the product is not quite right, and consumers will be left with that slightly uneasy feeling.
Freelance solicitor as a concept is not the model widely adopted by experienced and respected solicitors with a following when joining, as a consultant, one or multiple law firms to provide advice.
Freelance solicitors in the SRA sense will be those who practise alone, outside of a law firm and who employ no-one else.
The SRA currently regulates the entities through which a solicitor practises under the Practice Framework Rules 2011 (PFR), and these rules are delegated to the SRA under the Legal Services Act 2007.
The SRA, in its June 2017 response to the ‘Looking to the future consultation’, explained the change as follows: “We think that consumers should be able to choose and use legal services flexibly from:
- an unregulated business
- a regulated individual working in an unregulated business (a non-LSA regulated firm)
- a fully regulated firm.
The freelance solicitor model will allow practice as an individual, so not as a Limited Company or Limited Liability Partnership (LLP).
The impact of this restriction is potentially devastating to the SRA’s plans because it means if anything goes wrong the solicitor has personal liability.
Why would any solicitor risk their personal assets on this basis? Originally the SRA had insisted that the freelance model would need “adequate and appropriate” indemnity insurance whether or not they were doing reserved or unreserved legal activities work.
For unreserved legal activities the proposal now lodged with the Legal Services Board (LSB) is they would not need “adequate and appropriate” insurance.
Change of mind
Bizarrely, the SRA has changed its mind and not given a reason. Talking to insurers since the proposals emerged the theme is always the same, solicitors are a high-risk sector and they often find it a challenge to make money.
This new model is higher risk and they are likely to stay away from it. Under the SRA’s Minimum Terms and Conditions (MTCs) for law firms, the insurers are liable irrespective of the insured parties’ conduct (i.e. fraud, theft, etc).
This is a powerful protection to law firm clients and avoids insurers being able to decline cover. A law firm’s policy does not work like most insurance policies by giving them the option to decline cover.
The risks for solicitors are not simply that they would be personally liable and unable to insure but that the insurance may be declined when they need it leaving them personally liable.
The SRA could of course concede the policy aims are well intentioned, but the proposals are flawed.
However, the SRA – knowing change is rarely welcome, often opposed, but that solicitors adapt in time usually – crowbars the policy into practice.
Asking solicitors to walk in the middle lane of the motorway in terms of risk will not help consumers or provide access to justice – the aims of the proposals.
It will, to the contrary, be a greater risk to clients of solicitors. The SRA can, and in my personal view should, salvage these flawed proposals by ensuring that solicitors can use Limited Companies and LLPs and that the insurers’ concerns are met.
This might delay innovation, but an innovation attempt doomed to fail helps no-one and delays genuine reform.
The stakes for the SRA are high, these are the SRA’s most ambitious innovation plans of the last five years, are high profile and if they fail it will harm the solicitor’s profession and consumers
It will also undermine the SRA. The SRA desperately needs to find a pathway, not the middle lane of the motorway.