1. The new SRA Standards and Regulations and the non-commercial sector
Carol Westrop and Chris Handford

2. Our regulatory reform programme
In 2019 we are introducing the SRA Standards and Regulations. This will replace the existing Handbook.
The new SRA Standards and Regulations will include new Principles, Codes of conduct for individuals and firms and new Accounts Rules.
The new rules allow solicitors to set up as ‘freelancers’ and provide ‘unreserved’ legal services from businesses not regulated by a legal services regulator.
We will start with a general overview of the reform programme
We are planning to introduce the new SRA Standards and Regulations between April and July next year. Our oversight regulator, the Legal Services Board (LSB), has now approved the changes.
We will have more support and guidance available in the new year, including guidance for the non-commercial sector (which we will cover later).   
We are also we are addressing the current lack of available information about legal services by requiring law firms to publish more information about their services, costs and complaints procedures (although these requirements won’t apply to the non-commercial sector).

3. Why we are changing We are changing our rules to make them:
More focused on what matters to us.
Shorter, easier to understand and clearer.
We also wanted to make it easier for:
The public to access legal services.
Solicitors and firms to do business by removing restrictions in our rules we cannot justify.
The new Standards and Regulations will mark the culmination of a programme of reform that we have been undertaking over the past few years.
We are not just changing the rules, but the way we regulate and our approach. This is reflected in shorter, sharper rules, focused on what we think matters, e.g. protecting the public. Our approach will be underpinned by a new enforcement strategy that allows us to be more targeted and proportionate in our approach to discipline and enforcement should we need to take action.

4. The key changes New Principles and new Code for individuals
Simpler accounts rules, new definition of client money
Changes to the ‘qualified to supervise’ rule
Clarity about pro bono – no need for ‘letter of comfort’
Changes to our insurance requirements
We’ve rewritten our entire rule book and are changing the way we regulate. We have made a number of policy changes to our rules to remove restrictions we cannot justify and allow more freedom for those we regulate to innovate and provide services to meet consumers’ needs.
We have made our new rules shorter, clearer and focused on what matters. We have also presented our rules in a more coherent way. For example, we now have a Code of Conduct for the individuals we regulate, a Code of Conduct for firms, and we have grouped all authorisation requirements in one set of regulations for individuals and another in a set of rules for firms.
The current Handbook is too long, duplicates other legislative and regulatory obligations, is too prescriptive and needs changing too often to keep up with changes to the market and so is often out of date. Those we regulate think too much time is spent trying to keep up and comply with technical detail. This is seen by the sector as one of the highest costs of regulation. Our new rule book and regulatory approach seeks to address this.
The changes we’ve made that are most relevant to the non commercial sector are shown on the slide.
Taking each in turn:
We have streamlined our Principles and Codes. We have removed existing duplication and have created separate firm and individual Codes. The SRA Code of Conduct for Solicitors, RELs and RFLs sets out the professional standards and behaviours expect of solicitors in practice and is clearer to follow for those, such as solicitors in the non-commercial sector, who are practising outside of a firm that we regulate.
The Code for Solicitors, RELs and RFLs also sets out some general requirements in relation to handling money. This, as well as changes to the way in which we define client money, has meant that we can streamline many aspects of our accounts rules. Our accounts rules also make clear that LAA payments do not need to be paid into a client account and can be paid into your organisation’s office account (this position is also reflected in the LAA civil contract). For the non commercial sector, the Accounts Rules are unlikely to apply in their entirety (whereas our previous accounts rules applied to all solicitors employed by a non-SRA regulated employer).
We have tightened up our ‘qualified to supervise’ rule and will now require supervisors to have three years practising experience, rather than having only been qualified for three years. The rule will only apply to bodies we regulate or freelancers providing reserved legal services and not solicitors in non-commercial bodies. This is partly because of the other safeguards (e.g. boards of Trustees, compliance with charity law) that these bodies have in place. If non-commercial bodies consider it useful or necessary to employ a solicitor with three years’ experience  to supervise the work then still can. However we don’t think its justified for us to impose that requirement on non-commercial bodies in a blanket way -they are in the best position to judge given the nature of their work, client base  and staff.  
We have clarified and simplified the circumstances when a solicitor may carry on reserved legal activities. Pro bono is treated the same as any other work under the new arrangements – so could be provided in a number of ways e.g. -on behalf of the agency, on behalf of a firm, on their own behalf as an individual solicitor (in that case if doing reserved work will need to meet the “freelancer” requirements for that work).
Rules 1 to 4 of the PFRs have been replaced with a much simpler provision in Regulation 9 of the SRA Authorisation of Individuals Regulations. This regulation adds very few restrictions on the way in which you may provide both reserved and non-reserved legal services and limits this to those restrictions which apply under legislation, including in particular, section 15(4) of the LSA. This means that the ‘letter of comfort’ that we currently have in place about pro bono work will no longer be necessary
PII – Under the code for individuals, solicitors carrying out reserved legal activities in a non-commercial body must ensure that the body takes our and maintains insurance that is ‘adequate and appropriate’ cover for all the services the solicitor provides, whether or not they comprise of reserved legal activities. This is a change from our previous requirements that the insurance should be ‘reasonably equivalent’ to our indemnity insurance rules.

5. Benefits of changes Separate Code for individuals provides clarity
Rules are easier to navigate
More flexible insurance requirements
Clarity about pro bono
Sector specific guidance
By introducing a new individual code for solicitors, RELs and RFLs, solicitors, their clients and the non-commercial bodies they are working for can be clearer about solicitors obligations and duties, regardless of where they work.
The rules have been streamlined, making them easier to navigate and understand. This will make it easier for those working in the non-commercial sector to cut through the rules that are not relevant.
The new rules are also more flexible. This is demonstrated by changes to the insurance requirements for non commercial bodies. We have amended paragraph 5.6 of the Code of Conduct for Solicitors, RELs and RFLs to make it clear that solicitors or RELs practising in a non-commercial body must only meet the requirement to ensure that the body takes out and maintains indemnity insurance that provides adequate and appropriate cover if the solicitor or REL is carrying on reserved legal activities. Once the requirement for insurance arises, the requirement to have adequate and appropriate insurance covers all the solicitor or REL’s activities. This prevents the risk of arguments with insurance providers over which work comprises reserved legal activity and prevents only part of a case being covered.
We will be giving guidance on adequate and appropriate -but there is already some on the website for solicitors (who have the same requirement) that they could look at in the meantime.
The previous requirement that insurance should be ‘reasonably equivalent’ to our general indemnity insurance rules, potentially placed a higher cost on non commercial bodies than was necessary. The new rules now allow for non commercial bodies to consider the type of advice they provide and the potential risks to clients if things go wrong and make a decision about indemnity insurance that best meets the risks. This may be more or less than our minimum terms and conditions for indemnity insurance.

6. Guidance for the non-commercial sector
We know that the non-commercial sector would welcome additional guidance on how the new rules will apply to it.
We have been talking to the non commercial sector about the changes and commissioned experts to help us develop guidance for the sector.
We are still working on the guidance but will have it in place before the new rules come into effect.
We have asked sector expert, Vicky Ling, and Iain Miller and Lucy Williamson of Kingsley Napley to produce guidance for the non- commercial sector. As well as drawing on their own expertise, Vicky and Lucy have involved several ‘readers’ from the non commercial sector to ensure that the guidance is fit for purpose.
We also hosted a workshop with a range of colleagues form the non-commercial sector in the summer to get their views at an early stage about what the guidance should cover. The guidance is more detailed that we would usually produce, but this recognises the specific challenges that the non commercial sector has.
The guidance will cover areas highlighted in these slides as well as providing case studies and templates for client care letters, including client care letters for pro bono work.

7. Find out more about our reforms at www.sra.org.uk Questions?