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…
Whilst there have been some obvious changes in terms of the simplification and rationalisation of the rules, it is the more subtle changes, in relation to underlying policy and the overall regulatory approach, that firms should be focusing on. The StaRs 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.
Under the new StaRs, there will undoubtedly be a greater emphasis placed on the ethical obligations of those the SRA regulates; nowhere is this more apparent than in the new SRA Principles and in the new Codes of Conduct.
The ‘new’ (ethical only) principles
Those who have done their homework will know that the SRA Principles will be reduced from ten down to just seven and that they now include a separate principle requiring regulated practitioners to act honestly. It is important to note though that the four principles that have been removed, are not disappearing altogether, but have instead been shifted into the Codes of Conduct. Each of the excised (old) principles have something in common; they are professional standards focusing on the expected behaviours in running a business.
As to the principles that are left behind…
The seven (new) principles are now the high-level ethical standards that comprise the fundamental tenets of behaviour expected of all those the SRA regulates. Crucially, these principles will apply both inside and, where appropriate, outside of practice. It will no longer be the case that it is just the current Principle 2 (acting with integrity) and Principle 6 (behave in a way which maintains the trust the public places in you and in the provision of legal services) that are capable of application to conduct outside of practice (i.e. in your private life).
The emphasis on ethical obligations is brought even more to the fore by the fact that every one of the new principles is universal in its application to all those the SRA regulates – solicitors, registered European lawyers (RELs), registered foreign lawyers (RFLs), non-solicitor employees (including those with management responsibilities) and law firms. This underscores the SRA’s desire to engineer the creation of an ethical culture within the profession, where everyone is encouraged to become more aware of their ethical obligations and the need to be accountable for their own actions.
On top of this, by creating a separate Code of Conduct for Firms and simplifying the Code of Conduct for Solicitors, RELs and RFLs, the SRA is sending a very clear message that it expects all those it regulates to understand what is expected of them. In this new world, there will be very little room for excuses as to a lack of understanding as to the applicable ethical and professional obligations. The expectation of ethical and professional behaviour attaches to the firm as much as it does the individual; long gone are the days where a firm might have turned a blind eye to the suspected (mis)conduct of its employees or managers on the basis that responsibility lays at the door of the SRA for taking regulatory action.
The SRA will now expect the firm to take more responsibility for the actions or inactions of its employees and to promote a culture where allegations of misconduct are taken seriously and investigated at a local level and where prompt and early engagement with the SRA becomes routine practice.
The all-important Enforcement Strategy
Underpinning these changes, is the SRA revised Enforcement Strategy, launched on 7 February 2019. A passing familiarity with this crucially important document will not suffice; without committing the time to really understanding its terms, you will be ignorant as to what the SRA sees as the ‘big ticket’ issues, and of the areas where it will focus its regulatory action. The Enforcement Strategy includes detail of what the SRA will take into account when determining the seriousness of any concerns raised about a failure to meet its standards or requirements. It makes clear, via the Principles and the Codes of Conduct, that the SRA aims to give a clear message about “what regulation stands for and what a competent and ethical legal profession looks like”. In the introduction the SRA makes clear that its regulatory approach seeks to “promote a culture in which ethical values and behaviours are embedded”; in fact, this is one of three main objectives alongside ensuring a strong, competitive and highly effective legal market; and ensuring a focus on quality and client care.
We will be speaking in more detail on this topic at the ARK Risk and Compliance for Law Firms on 28 and 29 January 2020. We will look at the ethical obligations of managers and employees within firms, the SRA’s requirements and the interplay with the revised approach to enforcement. We will also focus on the culture of law firms – past, present and future - and the importance of embedding strategies in relation to wellbeing and equality, diversity and inclusion.
This article first appeared on Legal Compliance Insight on 23 October 2019.
About the authors
Julie Norris is a Partner in the Regulatory department and specialises in advising in the health, professional services, legal and financial fields.
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.