SRA Standards and Regulations 2019

Reach for the StaRs!

22 October 2019

Are we nearly there yet?

As most in the legal profession are now aware, the Solicitors Regulation Authority (SRA) will be launching its new set of Standards and Regulations (known now by many as the “StaRs”) on 25 November 2019.  The StaRs could herald a new era in legal regulation in which there will be a distinct shift in focus, both in terms of what the SRA considers to be its priorities as a regulator (of both individuals and firms), and in what the SRA expects of those it regulates.

Join us for the final leg

Over the course of the next few weeks and in the build-up to the “go live” date, we will shine the spotlight on and share our insight into some of the more interesting aspects of the StaRs, including looking at the more subtle changes, in relation to underlying policy and overall regulatory approach.  This will include us looking at areas such as the new obligations in relation to reporting concerns built into the Codes of Conduct and developed in response to topical issues such as the #MeToo campaign; addressing hostile working environments and improving law firm culture.  We will also look at the new provisions and initiatives relating to price transparency. But we really don’t want to spoil the surprise - so that is all we will say for now.

But to launch this series of blogs, we will first set out what we consider to be the SRA’s drafting rationale behind its regulatory reform before turning to another key change already in place: the SRA’s revised approach to enforcement.

Drafting approach

Back in 2014, the SRA started to look at its Looking to the Future reform programme.  The SRA stated at the time that this was designed to make sure it could meet the needs of the public in whose interest it works, by seeking to regulate solicitors and law firms in the right way.  To meet this aim, the SRA confirmed it would try to:

  • Make its rules focus on what really matters – high ethical and professional standards;
  • Make it easier for the public to access legal services and try to address  what it regards as unmet legal need; and
  • Make it easier for solicitors and firms to do business in a way which best suits them, by introducing more flexibility around practice, essentially moving away from a one-size-fits-all prescription-heavy approach.

We consider that the SRA’s message throughout the re-drafting process has been fairly clear, seeking to reflect the proposed changes set out in its reform programme.  These reforms seem ultimately to be about stripping back and paring down and we have the following observations:  

  • The structure and overall format have been re-designed which has the effect of making the StaRs more user-friendly, future-proofed and accessible, and considerably shorter in overall number of pages.  This translates well onto a digital platform with an interactive set of standards and requirements which you can highlight, flag and obtain extracts from, from your own devices
  • There is reduced duplication  – we can see that the SRA has deleted provisions which already existed elsewhere in the Handbook; are already requirements imposed by legislation; or which are no longer required as a result of policy reform
  • Prescription has also been reduced, which, in our view, should allow you more scope within which to exercise your professional judgement
  • There is more clarity which we would say lends itself to increased flexibility in relation to how you practise and, where relevant, how you manage your business.  As we stated above, this is less of a “one size fits all” approach and perhaps most evident in the new Accounts Rules
  • The SRA has indicated that the StaRs will be supported by a range of guidance, topic guides and cases studies.  We are beginning to see guidance which the SRA has started to upload to its beta site, and which it has confirmed will be effective from the go-live date. But we undoubtedly will need more given the pared back nature of these provisions.

 

Structural approach – what’s new?

In the new world of the StaRS, currently featured on the SRA’s beta site, we all know we will be faced with a streamlined set of Principles, two Codes of Conduct (one for individuals and one for firms) and a simplified set of Accounts Rules,  encompassing reforms which the SRA assures us will allow us to practise in more flexible ways . 

What we might not all be aware of are some of the lesser-known changes to the existing 2011 Handbook. For example, there will be two sets of authorisation provisions (one for individuals and one for firms).  There is also a substantially revised set of criteria relating to the assessment of character and suitability – these are now much more about setting out the types of factors the SRA is likely to take into account when looking at your character and suitability and also confirming the obligations you will have to provide relevant information, both at the start of your journey and on an ongoing basis. Perhaps the most contentious change will be the clear move away from the starting presumption of refusal unless exceptional circumstances apply. 

Finally, and of particular relevance to the work we undertake as a team, the provisions relating to regulatory and disciplinary processes have been rationalised.  These seem to be set out in a more ordered and logical fashion, starting with the concern coming in, through to its conclusion.  The removal of prescription lends itself to the provisions being more flexible for both sides, perhaps paving the way for the SRA to embrace procedural change in relation to how it investigates and supervises those it regulates. This drive towards simplification is also emphasised by having appeals provisions in a separate set of rules, now, we would say, with a clearer distinction between decisions subject to internal review by the SRA and those subject to an external appeal to the Solicitors Disciplinary Tribunal (SDT) or to the High Court. What is important to note here, is that all these subtle changes very much reflect the revised regulatory approach to enforcement, to which we will now turn our attention.

 

Revised Enforcement Strategy

As we set out above, come 25 November, we are of the belief that much more emphasis will be placed upon using your own judgement and applying the StaRs to your own practice, conduct and working environment.  Underpinning these changes is the SRA’s revised Enforcement Strategy, launched on 7 February 2019. Accompanying this is a range of “Enforcement in Practice” topic guides, which we consider provide a clear indication as to where the SRA’s focus might be.

We think it is fair to say that a passing familiarity with this key document will not suffice; without committing the time to really understanding it, you will be very much in the dark as to what the SRA sees as the ‘big ticket’ issues, what it considers to be serious, and the areas where it has committed to focus its regulatory action. The Enforcement Strategy includes detail of what the SRA says it will take into account when determining the seriousness of any concerns raised about a failure to meet its standards or requirements. In doing this, we think the SRA is sending a fairly clear message as to its regulatory approach; in the document’s introduction this couldn’t be clearer where it states it seeks to ensure a strong, competitive and highly effective legal market; ensure a focus on quality and client care; and promote a culture in which ethical values and behaviours are embedded.

 

The SRA approach to enforcement - key points to take away

  • We regard it as no coincidence that the Strategy’s launch pre-dates the launch of the StaRs by some nine months.  The lead-in time for this underpinning document makes clear that via these new standards and requirements, the SRA aims to give a clear message to all those it regulates: about “what regulation stands for and what a competent and ethical legal profession looks like”.  It is an opportunity for us all to better understand what the SRA is likely to see as focus areas in terms of where misconduct arises and what it regards to be “serious” and what regulatory action may result.  For example, the “Use of social media and offensive communications” topic guide reflects the status quo that this issue is very much an increasing focus for the SRA, in terms of investigating and taking any necessary regulatory action.
  • We note that there is an emphasis on the notion of a “serious breach” – describing conduct or behaviour which represents a concern to the SRA, and in respect of which it may take regulatory action. The SRA states it will “focus its actions on the most serious issues”. That said, there appears to be no intention by the SRA to define “serious breach” – instead, it confirms that a mere breach is not in and of itself reportable: it must be “serious”.  We suggest this will include matters which can be described as “serious misconduct”, or conduct that is improper and falls short of ethical standards, or failures relating to firms’ systems and controls.  It would no doubt be helpful for the SRA to make more transparent its decision making processes in relation to determining seriousness.
  • Sometimes it will be very clear what is sufficiently serious – for example, we have in mind allegations of abuse of trust and/or power, taking unfair advantage of clients or others, sexual and violent misconduct, lack of integrity, dishonesty and misuse of client money. Other times, we think it will very much be a case of you needing to weigh up aggravating and mitigating factors, which once you have read it, you will see are set out in detail in the Strategy.
  • The SRA has indicated that it may also consider “contextual mitigation” when assessing seriousness of a breach.  For example, features of the environment in which you are working which could have affected your judgement or any action you were able to take; supervision arrangements in place; and “toxic” working environments.  We are all aware of the recent case law going to the heart of these issues. That said, the SRA’s message is quite clear on this - there will always be conduct that it considers to be so serious, so much so, that any contextual mitigation is unlikely to impact the outcome of the case.

 

So, what’s next?

In our next blog, we will look more closely at some of the key changes in relation to the revised Principles and the Codes of Conduct. Whilst there have been some obvious changes in terms of the simplification and rationalisation of these provisions, it is the more subtle changes, in relation to underlying policy and overall regulatory approach, that we would suggest firms and regulated individuals will want to focus on.

About the authors

Iain Miller is a Partner in the Regulatory department and specialises in advising law firms and the legal professionals on legal ethics, investigations, and public law matters

Jessica Clay is a Senior Associate in the Regulatory department and specialises in legal services regulation, with a focus on regulatory compliance, legal ethics, investigations and public law matters. 

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