Solicitors allowed to work for unauthorised businesses, that is, businesses not authorised by the Solicitors Regulation Authority, (SRA), from the end of next month.
Solicitors considering taking advantage of more liberal practising rules have been urged to beware of the potential pitfalls.From 25 November the SRA will allow solicitors to do non-reserved work[efn_note]Non-reserved activities include, for example, will writing, most employment law and providing legal advice. Non-reserved activities can be provided by unregulated individuals without a formal requirement for particular training or qualifications. But until 25 November 2019 solicitors can only offer these non-reserved services to the public when working in a firm regulated by us or another legal regulator.[/efn_note] for unauthorised businesses or as a freelancer, subject to certain restrictions.
New practice notes from the Law Society outline the opportunities the revised regulations can bring but also flag up challenges for those opting to work outside traditional practice.
In particular, those working in unauthorised entities should be clear to clients that it is their employer and not them holding client money; they must explain who exactly will be carrying out the work’ and they must outline how services are regulated and what client protections are available.
For freelancers, those doing unreserved work are advised to obtain appropriate insurance and inform the insurer where they intend to see clients. Solicitors undertaking any reserved legal service must obtain what the SRA has referred to as ‘adequate and appropriate’ professional indemnity insurance cover.
The guidance note says individuals contemplating using the freelance model may wish to consider coming together with other solicitors who are similarly minded to pursue independent practice in a chambers arrangement as self-employed solicitors, potentially with complementary practices.
In this case, they are reminded that freelancers cannot employ any other party unless they are undertaking non-reserved legal services.
Clients of freelance solicitors should know about the regulatory status of their provider, either through the solicitor’s website or in an engagement letter to be signed and returned to confirm clients have understood the position.
The note adds: ‘We encourage you to focus on your appetite for risk and the practical application of operating as a freelance solicitor.
‘As with any new form of practice there may initially be some scepticism and reputational implications. You need to consider whether you have factored this into your long-term career plans and wider aspirations.’
The Law Society remains concerned about how well clients will understand the various elements of the profession and be aware of the protections available to them.
Anna Bradley Chair of the SRA has said “there are outdated and unnecessary rules”
Law Society president Simon Davis said: ‘The new handbook is opening to the door to different tiers of solicitors operating under different requirements for professional indemnity insurance, different protections for clients and, possibly, differences over where the compensation fund applies.
‘One of the key concerns we have had is that the simplicity and clarity of the current system will be lost, leaving clients confused about the protections offered by the solicitor they engage and then, if they are let down, potentially left without recourse.
He added: ‘Our new practice notes are a must-read , for the profession.’
As of 25 November, use of the SRA digital badge will also become mandatory for all regulated firms which run a website.
