The matrix, finally loaded
It took the miners' compensation fiasco and solicitors helping themselves to their firms' money one time too many for the regulatory arm of the Law Society to finally come up with a plan to tackle risk in the profession.
It took the miners' compensation fiasco and solicitors helping themselves to their firms' money one time too many for the regulatory arm of the Law Society to finally come up with a plan to tackle risk in the profession.
No official document has been issued since the new code of conduct, with it outcomes-focused regulation, was unveiled last autumn. But little by little the semi-autonomous Solicitors Regulation Authority is constructing a framework which it says will be both effective at preventing risk arising and sufficiently flexible to adapt quickly to changing market circumstances.
The central piece of this jigsaw will be a matrix combining the SRA's experience of the types of breaches likely to occur with information the regulator has about individual firms.
Across it will run a set of so called 'themes' which the SRA says present a higher risk level. Mainly this will refer to areas of practice involving vulnerable clients. At this stage the SRA has identified some obvious ones: immigration, elderly clients, crime, or clients with mental health conditions, to name a few.
But Samantha Barrass, the SRA director responsible for risk, says this is a moveable definition that will adjust as new risk types emerge. Payment protection insurance is one of them. After being alerted to firms advertising themselves as PPI compensation specialists, the SRA wrote to all 25 or so practices known to undertake this kind of work reminding them of their regulatory obligations. This included the fact that claimants shouldn't be misled into thinking they ought to use a lawyer or that using a lawyer would help secure a bigger chunk of the FSA's compensation cake.
This particular project is still in progress but it has unequivocally put these firms on notice that the regulator has its eyes on them. More significantly, it tells the profession that the regulator is keen to avoid a repeat of the miners' compensation meltdown and avert the kind of accusations of inefficiency levelled against the Law Society at the time.
Clearly the SRA doesn't have information on all 11,000 law firms in England and Wales. It will take years before it builds up a comprehensive picture for all of them. Along the way the SRA will have to be careful not to be seen as biased against any particular group. BME firms spring to mind '“ although Samantha Barrass is confident that the new matrix will be 'blind' to the make-up and client profile of individual law firms.
The SRA has its work cut out as it maps out a way out of shrugging off the reputation it inherited from the Law Society as a self-interested body looking after its own. But at least it now seems to be heading in the right direction.