The SRA Standards and Regulations – a year on

30 November 2020

It has been a year since the Solicitors Regulation Authority (SRA) launched its Standards and Regulations (StaRs) and even longer since the revised Enforcement Strategy was rolled out.  This time last year, we produced a series of blogs relating to launch of the StaRs and provided our views on what we thought you needed to know.
 

One of the interesting aspects we focused on was the importance of the revised Enforcement Strategy acting as the lynchpin and the vehicle through which the SRA seeks to send a fairly clear message as to its regulatory approach – which includes “promoting a culture in which ethical values and behaviours are embedded”. From that point of focus came a guest blog written by Crispin Passmore, former Executive Director of Policy at the SRA – Ethics and what’s expected of you. In this blog, he emphasised the move towards a “culture of professionalism operating across flexible and diverse practices” and, beyond the ethical obligations placed upon regulated individuals, a new regulatory focus on a firm’s culture as well as its systems and controls. This positioning is underpinned in the introduction to the Code of Conduct for Firms where the SRA states that the Code describes the standards and controls expected of firms it authorises, where these standards aim to “create and maintain the right culture and environment for the delivery of competent and ethical legal services to clients.” As Passmore highlighted in that blog a year ago, regulated firms need to have as strong a focus on ethical infrastructure and the culture that makes them work, as they do on legal knowledge or client facing skills.  Those firms can expect increased scrutiny from their regulator in this area. So what is happening a year on in this regard?

SRA horizon scanning

Last week, the SRA published its Risk Outlook for 2020/1. In this document, the SRA sets out its views as to what it considers to be the key risks and challenges that the profession currently faces, with the aim of helping firms to protect themselves and their clients. It is also a document which, by its very nature of highlighting the main risks firms and solicitors face, makes clear what the SRA sees as its focus areas.  It should come as no surprise given what 2020 has gifted us so far that two focus areas in the Outlook are Brexit and the Covid-19 pandemic, collectively framed as the “Market Landscape in 2020”. And as expected, the usual suspects also feature – AML, client money, information and cyber security and we would, this year, include integrity and ethics, in that category, on the basis that it essentially reminds us what might amount to unethical behaviour and includes some case examples to that effect.  

However, we want to focus on two other priority risks highlighted in the Outlook – Meeting legal needs; and Diversity in the profession.  While both were present in last year’s Outlook, we are interested to see the regulatory approach to these risks, given they feature as a strategic priority in the SRA Corporate Strategy 2020-23 published in March of this year. Objective three in the Strategy – described as “anticipating and responding to change” – addresses the need to improve access to legal services and sets a commitment to build understanding of emerging opportunities and challenges, including for users of legal services. 

 

Meeting legal needs and diversity in the profession – what’s on the regulator’s radar?

Meeting legal needs

It is very clear what the impact of unmet legal need can be, which goes beyond simply not being able to arrive at a desired outcome in respect of the legal issue you face. In the most extreme cases, the harm caused can include a loss of liberty, physical and/or mental suffering, or a loss of livelihood.  And vulnerability – which can manifest itself in a number of ways - can very clearly be an aggravating feature.  There are many known reasons for why individuals and businesses struggle to access legal services which go beyond the obvious cost barrier. These include a lack of awareness and knowledge in respect of legal rights and a limited understanding of who is able to help, which is undoubtedly linked to being able to access appropriate services and information.

In the Outlook, the SRA sets out what it expects of those it regulates to help address this priority risk and this goes beyond mere compliance with regulatory obligations relating to price transparency and client information. This involves the need to better understand legal need and what you might need to do to make the services you provide more accessible. This might include exploring more innovative ways to provide services including the use of different technologies – and there is a clear driver by the SRA in promoting lawtech to help those who are currently unable to access legal services to be able to do so.  In terms of regulatory approach, there is mention of the SRA’s “Innovation Space” and the SRA considering applications to the next “Regulators’ Pioneer Fund”, a government backed initiative set up to help UK regulators support innovation and emerging technologies.  However, it is possible that the issues run far deeper than this and it could be a case that users of legal services do not feel the culture and values being displayed by you or your firm are aligned with their own and they choose to take their business needs elsewhere. And it is for this reason that we consider it key that more work is done – from all sides - to move further towards a “culture of professionalism operating across flexible and diverse practices.”

Diversity in the profession

It should go without saying that the legal profession needs to reflect society and the communities it serves. But the data presented still tells us a very different story. For law firms that are not diverse and fail to display inclusive values embedded within their workplace culture, they expose themselves to risk on a number of layers. This is what the Outlook addresses. While these firms risk falling behind their competitors and losing out on business, there are much more serious ramifications. For example, they are at risk of failing to meet the needs of consumers and in doing so, risk damaging the reputation of the profession and the trust placed in the profession and the provision of legal services – which could lead to unwanted regulatory scrutiny.  

We are living in a society full of inequality and the current pandemic and the adverse impact it is having on the economy is simply adding fuel to the fire. While some firms are clearly promoting a good workplace culture which seeks to address all forms of harassment and discrimination, this is clearly not the case for all. And the SRA recognises in this Outlook that more work needs to be done.

Beyond mere compliance with one’s legislative and regulatory obligations, the latter of which include an overarching requirement to act in a way that encourages equality, diversity and inclusion, it is clear from the Outlook that the SRA is expecting a lot more from those it regulates. It cites the example of larger firms who have signed the Race Fairness Commitment and have committed to improve recruitment and retention of BAME talent and eliminate racial pay disparity.  But the SRA only encourages firms to prioritise EDI and lead by example.  In respect of this, the Outlook highlights a range of online EDI resources that are available, provided by the SRA and beyond, covering race, disability, trans and non-binary inclusion and harassment and bullying. 

Beyond simply offering guidance and support, the Outlook makes clear that the SRA will take regulatory action where it is needed. Unsurprisingly, the SRA also states that it will take all allegations of victimisation, discrimination or harassment by someone it regulates very seriously and will deal sensitively with any such reports. 

In terms of horizon scanning, the SRA has indicated that it will be publishing its second “Upholding Professional Standards” report in December and that will include findings following the monitoring of individuals within SRA enforcement processes by ethnicity, gender, age and disability. And no doubt in light of ongoing criticism, the SRA has confirmed that it will be commissioning research to look at why there is an overrepresentation of BAME individuals in the reports made to regulators in legal services and beyond. Finally, the SRA has confirmed it is looking at how firms support solicitors through pregnancy and maternity, with findings expected to be published in 2021.

Compared to last year’s Outlook, which primarily focussed on disability, it seems that a much wider range of EDI issues are now very much on the SRA’s radar. This suggests, as we predicted over the summer that firms should now be prepared for greater regulatory scrutiny of their workplace culture, particularly in respect of EDI.

 

Legal Services Board horizon scanning

In March 2020, the LSB released its Business plan 2020/21. That Business Plan mirrors what has been set out in the SRA’s new Risk Outlook with two of its three strategic objectives for 2018-21 as follows:

  • “making it easier for all consumers to access the services they need and get redress”;
  • “increasing innovation, growth and the diversity of services and providers”.

These issues are reflected in the LSB report The State of Legal Services released last Wednesday.  This report marks the LSB’s 10 year anniversary of independent regulation of the legal sector in England and Wales.

The report concludes that “despite the achievements of the last decade, the basic legal needs of many citizens are not being met”.  This is a significant focus of the report alongside stronger confidence in the profession and better services. The report also looks at some of the achievements reached including consumer choice and better experience for consumers, creating an environment for innovation and economic success.

 

Basic legal needs and fairer outcomes, stronger confidence in the profession and ensuring better services for consumers; what are the issues?

Basic legal needs, fairer outcomes

The LSB acknowledges that the issues surrounding basic legal needs and fairer outcomes go beyond a lack of funds to pay for legal services, but are rooted in “wider social and economic inequalities”. Linked to an inability to access legal services is the sometimes inevitable result that “legal issues go unresolved, this causes harm to people’s finances, relationships, physical and mental health.  This can in turn, trigger other social problems, such as unemployment and crime.”

While it notes that stronger competition in the sector may spur innovation and create a driver for lower prices for legal services, it also considers that the recent emphasis “on prevention, early intervention and solutions like health justice partnerships has been welcomed” though more needs to be done to redress the balance.

Ensuring basic legal needs are met is inextricably linked to also ensuring fairer outcomes for those who are disproportionately impacted by a lack of access to legal assistance and advice throughout their lives.  Unsurprisingly, the LSB has identified that certain parts of society consistently experience deeper disadvantage than others and this is compounded by a lack of access to legal assistance.  BAME communities, people with disabilities, younger people, those on lower incomes and people with a low level of education are shown to frequently appear worse off than those who are not within those parts of society.

Dismantling barriers to a diverse and inclusive profession at all levels

For the first time in the 100 years of women working in law, there are more female solicitors than male solicitors. While this is huge progress for women, there are other significant diversity issues experienced by the same parts of society we have noted above who still have difficulty in accessing legal advice and support.

While there are higher proportions of BAME lawyers and LGBTQ+ lawyers than in most other professional groups, the proportion of disabled lawyers is significantly lower than other professions in the United Kingdom.

However, women, BAME lawyers, LGBTQ+ lawyers and disabled lawyers all face significant issues, disproportionate to their representation in the profession, in respect of career progression to Partner or equivalent levels.

Stronger confidence in the profession

The importance of ensuring consumer trust in our profession is paramount to ensuring the profession is doing its job, and doing it well.

With concerns about quality of technical legal skills in certain areas including advocacy in criminal and youth courts, and immigration and asylum work, there is still work to be done.

Better services

The Competition and Markets Authority (CMA) 2016 report which found that a lack of information on price, service, regulation and redress was impacting competition was a huge driver for improving transparency in the profession.  The CMA will shortly produce a progress report on the sector following these changes.

The LSB report flags that more time may be needed before the full impact of the transparency changes can be seen.  At present, consumers are still reporting that they find it difficult to find information about price and quality, with most still discussing it with a legal services provider rather than finding that information on their website.

 

So where are we now?

The LSB rightly highlights that many of the issues the sector now faces, were apparent 10 years ago when the LSB was first created.  There are additional challenges which have arisen as a result of the Covid-19 pandemic, but the LSB is confident these are challenges that can be overcome. Nonetheless, it is clear that the sector needs to dedicate itself to working towards a resolution of these issues.

Major reviews of legal aid and the criminal justice system are underway and these will offer opportunities to change the way the legal profession works with and for society.

Starting this winter, the LSB has confirmed that it will consult on a new strategy for the legal services sector. So it will be a question of watching this space.

 

Closing remarks

The StaRs have laid the foundations and set the direction of travel for the SRA – hopefully, this will see the evolution of an age old profession to one that is more inclusive and diverse and one which the public can access, regardless of social background or means.

The foundations of the StaRs are now clearly supported by the focus areas in the SRA’s Risk Outlook and the concerns for the profession that the SRA has highlighted.  These concerns are very clearly shared by the LSB and will be a long-term focus.  The LSB’s message is crystal clear: regulators can and must do more in these areas, and they should expect their actions, or lack thereof, to be the subject of close scrutiny.

Further Information

For further information on the issues raised in this blog post, please contact a member of our Regulatory team.

 

About the Authors

Jessica is a Senior Associate with extensive experience specialising in legal services regulation. Jessica’s work in this sector focuses on advising her clients in relation to complying with regulatory obligations, better understanding the importance of legal ethics within regulation, regulatory investigations and public law matters, including reviewing regulatory frameworks and decision making processes.  Outside the legal services sector, she acts both for and against the regulators of the accountancy and actuarial professionals.

Sophie Bolzonello is an Associate, Australian Qualified, in Kingsley Napley’s Regulatory department.  Sophie specialises in advising regulated professionals on compliance, in investigations and in respect of enforcement action. She also advises regulators on policy, governance, prosecutions and litigation.

 

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