The ten commandments â€¨for legal professionals
Viv Williams explores how to tackle the all-too-informal relationship between regulators and representative bodies and reduce the compliance burden put on firms
The Solicitors Regulation Authority (SRA) is looking to reduce its 600-page handbook to 50 pages, yet the Legal Services Board (LSB) says that could be 'too much' for law firms to cope with. Why not go even further and have just a few pages of rules, which could be regarded as the 'ten commandments' for the profession?
In a progress report on all eight legal services watchdogs, the super-regulator comments the 'direction of the SRA's travel' can appear unclear to solicitors. On pruning the handbook, it adds that the SRA 'will need to consider carefully how it manages the risk' of overwhelming legal firms through such a radical exercise.
Is the LSB saying, then, that solicitors could have been penalised by unnecessary regulation?
The fact that we have eight regulatory bodies is confusing in itself, but the role of the SRA and its effect on solicitors specifically has not been an easy relationship these past few years. I am a huge advocate of regulation, but the time and money it takes to comply with the current regulation framework is hugely expensive. To run a compliance department in any firm, properly, costs approximately 20 per cent of any firm's turnover - who has the time and resources to do this? In comparison, in a recent survey of predominantly the larger banks it was estimated that 25 per cent of turnover would be spent each year on complying with Financial Conduct Authority regulation.
Credibility of regulation
In addition, the lack of independence between the legal regulators and representative bodies risks undermining the credibility of regulation, and allows the likes of the Law Society and Bar Council to delay reforms that would benefit competition, states the LSB. The government is planning to consult on making the regulators independent from their representative arms - a move welcomed by the LSB.
This affects the Law Society, Bar Council, Chartered Institute of Legal Executives, Chartered Institute of Patent Attorneys, Institute of Trade Mark Attorneys, and Association of Costs Lawyers; however, it is not yet clear whether the Institute of Chartered Accountants in England and Wales will be caught.
The LSB said the lack of independence was 'fostering complex governance arrangements to manage relationships between regulatory and representative functions which do not achieve full independence of regulation and which distract senior management attention on both sides from regulatory and representative matters respectively'. However, if you think this means the end of outcomes-focused regulation (OFR), think again. There simply is not going to be a reversal from OFR, as much as some of us would like to return to the 'good old days'.
We will now enter into a consultation period; I wonder how much consultation will occur with solicitor groups outside of the Law Society and what size of firm will be consulted? If we recognise that one size does not fit all, then we need the new handbook to apply proportional regulation, depending on the size of firm. I am sure there are many commentators (including the writer) with strong opinions that could help the consultation process. Some external input could well mean that at the end of the consultation we have a workable document which law firms for the foreseeable future can look to. We will have a better outcome with the correct people inputting into the process.
Has OFR become so convoluted that we are considering going back to some simple rules?
Obviously the below are tongue-in-cheek, but who knows, a miracle might just happen.
Thou shalt run your law firm as a business.
Thou shalt deliver excellent client service.
Thou shalt put clients at the heart of your business.
Thou shalt ensure anti-money laundering checks are thoroughly carried out.
Thou shalt never touch client money.
Thou shalt love thy bank manager.
Thou shalt not fall foul of cybercrime.
Thou shalt provide copious hours of professional ?development to all staff.
Thou shalt never make inappropriate comments ?on Twitter.
Thou shalt make a huge profit and give it away ?to someone needier.