Deregulation: What’s Ahead for Solicitors and Law Firms?

Law Society: Removing regulatory safeguards will reduce public protection

The news that solicitors will be permitted to work in unregulated entities has not been received well by the Law Society.

It’s ironic that the SRA, who were set up by the Law Society to regulate solicitors and remain a part of the Law Society, have brought about a comprehensive deregulation process which has met disapproval and condemnation by their founding parent. I doubt this was anticipated in 2007 when the single professional body became two.

And it’s doubly ironic that the SRA have renewed their comprehensive criticism of the SDT for applying the criminal standard of proof which they say is too high and fails to protect the public, yet have simultaneously confirmed the call to slash regulation from hundreds of pages of rules to two seven page codes (one for solicitors and one for law firms) and have opened the door for solicitors to work in unregulated providers.

Law Society President Robert Bourns’ response to the SRA’s deregulation announcement on 13 June is worth re-visiting:

“The SRA’s role is to regulate solicitors to ensure consumers are protected – yet here it is opening the door for some solicitors to work in unregulated entities, sweeping away long-standing rules referencing conflicts of interest, proper professional indemnity insurance and access to the compensation fund (underwritten by the profession) so if something does go wrong consumers could struggle to recover any losses”

SRA Chief Executive Paul Philip is singing from a very different song-sheet:

“Freeing up solicitors to work where they choose is good for the profession, opening up career opportunities, and good for the public. It will help to tackle the issue that too many people and businesses simply cannot afford to access the help of a solicitor when they have a legal problem. Removing restrictions on where solicitors can work will give the public more choice, increasing access to high quality legal services at a price they can afford.”

Could deregulation provide more career choices for solicitors?

Time for a divorce overdue for this unhappy couple? Presuming the Law Society’s concerns will be ignored, from next year solicitors can work where they choose. Career freedom and flexibility for solicitors will certainly be improved by removing the restrictions which Paul Philip says are outdated, and it could improve prospects for law students from minority groups who are not getting jobs at law firms to gain their first job as a solicitor.

Consumers of legal services will continue to have the choice to go to an unregulated legal service provider or a regulated one. And they should (hopefully) be told by any unregulated provider that they may be assisted by a solicitor, but the service may not protected by professional indemnity insurance. Although more protection is always good, many consumers may prefer to make the choice to pay less, even if that means they lack insurance and other protection provided by a regulated law firm.

Could law firms operate a separate telephone or online only unregulated legal service?

For law firms, the competitive threat from unregulated providers will seem keener and closer than it is now. We are already seeing a major surge in unregulated legal service providers and this new development will certainly give them more options, and enable them to compete more directly with law firms.

If unregulated legal services are cheaper, provided by a solicitor, and accessible online then what differentiates them from unregulated providers? Nothing but 14 pages of regulation, a professional indemnity insurance policy, and some more experienced (and expensive) solicitors?

Is deregulation a threat to law firms, solicitors or consumers of legal services? Or could it be an opportunity for law firms to restructure part of their work into a separate unregulated business? Please use the comments box below to submit your views.

Law Society entrance and building image attribution: 
cc-by-sa/2.0 – © Mike Quinn  geograph.org.uk/p/1174532 geograph.org.uk/p/1169642

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Martyn

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I set up Law Practice Manager because I enjoy sharing fresh and original opinions and posts on law management issues. Facebook and Twitter: @LawManager1 LinkedIn group: https://www.linkedin.com/groups/8538343

4 thoughts on “Deregulation: What’s Ahead for Solicitors and Law Firms?

  • June 24, 2017 at 7:00 pm
    Permalink

    We are a service to provider Law Firms, and if we had a bad debt we would complain (after correspondence was ignored) to the Law Society. Sadly we no longer have the ability to do this, which has removed somewhat the comfort zone we had when dealing with Solicitors.

    We no have to deal with LLPs, and recently were asked to undertake a large instruction by a three partner firm, which was a limited company, each ‘partner’ was a separate limited company. However we still had some limited comfort as they were regulated by the Law Society.

    Would we deal with lawyers that were not regulated by the Law Society, the answer is a simple NO.

    However we have been trading for 27 years, and know when to be wary of and whom to accept instructions from. What about general members of the public and small businesses, who when they need help turn to a solicitor?

    These people will simply turn to the most economic option, not realising what the risks are, what next surgeons not operating from hospitals?

    In my opinion there will be some horror stories, and it will be the general public that will suffer. As a company we do know what we are talking about, we work for various PI Insurers so see what can happen even when something goes wrong even with a regulated system.

    Author: Gary Noakes
    Fleet Investigations

    Reply
  • July 6, 2017 at 8:39 am
    Permalink

    At last wonderful news. A free market is the best way for regulation not just on price.

    I won’t buy double glazing without thoroughly checking out my supplier and getting at three quotations. Let the people who use our services decide who is best for them. Those lawyers that fall below proper standards will soon be vanquished. Those who choose sub standard (either intentionally or otherwise) get what they deserve.

    I can’t think of any other business where the supplier has to be insured for his ‘clients’ protection. Why can’t the client decide whether he needs insurance. Should clients be treated like children who don’t know what’s best for them. My insurance is a good service not those boys who cream off our profits year on year.

    Reply
    • Martyn
      July 6, 2017 at 9:36 am
      Permalink

      Thanks Ayub Sadiq, you raise some interesting and valid points. At the moment our regulator requires that we have insurance – but it would be interesting to give that choice instead to the consumer of our services as you suggest. I think most clients do not appreciate the level of protection afforded through regulation – it’s very low key and not understood well eve by solicitors even within the legal profession

      Reply

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