SRA Standards and Regulations 2019—in-house lawyers

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The SRA Standards and Regulations set out the standards and requirements that individual solicitors, RELs, RFLs and firms regulated by the Solicitors Regulation Authority (SRA) are expected to achieve and observe.

This Lexis®PSL Practice Note explains, from an in-house perspective:

  • how the SRA Standards and Regulations are structured
  • who is responsible for compliance with them, and
  • the potential consequences of breach

Accessing the SRA Standards and Regulations

The Standards and Regulations are available from the SRA website.

Who the Standards and Regulations apply to

Depending on the context of a given provision, the Standards and Regulations apply to:

  • solicitors, RELs, RFLs
  • authorised law firms, and
  • law firms’ managers and employees

References in this Practice Note to ‘in-house solicitors’ include RELs and RFLs.

Not every section of the Standards and Regulations applies to in-house solicitors working in a business that is not regulated by the SRA (or another legal regulator)—see below: Contents of the SRA Standards and Regulations, column ‘Does this section apply to in-house solicitors (working outside an SRA authorised firm)?’.

Contents of the SRA Standards and Regulations

The SRA Standards and Regulations comprise the following sections:

Section

What it covers

Does this section apply to in-house solicitors (working outside an SRA authorised firm)?

SRA Principles

The SRA’s ethical standards

Yes

SRA Code of Conduct for Solicitors, RELs and RFLs

The professional standards and behaviours expected of solicitors, RELs and RFLs in practice

Yes

SRA Code of Conduct for Firms

The responsibilities of authorised firms as regulated businesses

No

SRA Accounts Rules

How firms should keep clients’ money safe

No

SRA Application, Notice, Review and Appeal Rules

The SRA’s approach to applications, notices, reviews and appeals

Yes

SRA Assessment of Character and Suitability Rules

How the SRA assesses character and suitability of those seeking to join or be restored to the roll, to become authorised role holders, or register as RFLs or RELs

Yes

SRA Authorisation of Firms Rules

Requirements relating to the authorisation of entities as recognised bodies, licensed bodies and recognised sole practices

No

SRA Authorisation of Individuals Regulations

Requirements for individuals seeking authorisation as a solicitor, REL or RFL

Yes

SRA Education, Training and Assessment Provider Regulations

Requirements for organisations providing education, training and delivering assessments to those seeking to be admitted as solicitors and providing higher rights of audience assessments

No, unless your organisation is an authorised training provider

SRA Financial Services (Conduct of Business) Rules

How firms may carry on the regulated activities covered by the SRA Financial Services (Scope) Rules, and the way firms that are dually regulated by the SRA and Financial Conduct Authority (FCA) may conduct their non-mainstream regulated activities

No

SRA Financial Services (Scope) Rules

The scope of the regulated financial services activities that may be undertaken by firms authorised by the SRA but not regulated by the FCA

No

SRA Overseas and Cross-border Practice Rules

The regulation of those providing legal services outside England and Wales and expectations of those engaged in cross-border practice

Yes

SRA Regulatory and Disciplinary Procedure Rules

How the SRA investigates and takes disciplinary and regulatory action for breaches of its rules and regulatory requirements

Yes

SRA Statutory Trust Rules

What happens to money the SRA takes possession of following an intervention into a practice

N/A

SRA Roll, Registers and Publication Regulations

What information the SRA keeps about individuals and entities it regulates and other new information requirements

Yes

SRA Transparency Rules

What information authorised firms, and individuals providing services to the public from outside authorised firms, should make available to clients and potential clients

No—apart from r 4.3, although this only applies to in-house solicitors who are providing services to the public

SRA Compensation Fund Rules

How the SRA operates the SRA Compensation Fund

N/A

SRA Indemnity Insurance Rules

The SRA’s requirements for firms that are authorised by the SRA to take out and maintain professional indemnity insurance

No

SRA Indemnity Rules 2012

The rules governing the operation of the Solicitors Indemnity Fund

No

SRA Indemnity Enactment Rules 2012

The SRA’s rules to enact the indemnity rules

No

SRA Glossary

Definitions of the terms used in the SRA Handbook

Yes

Regulatory approach

The SRA has taken the view that solicitors and firms do not need pages and pages of detailed, prescriptive rules. Instead, it is putting ‘greater trust in professional judgment’ and focussing on ‘principles and the maintenance of high, consistent professional standards’. The Standards and Regulations largely removed prescriptive drafting and duplication of existing legal requirements (eg under the data protection or anti-money laundering regimes) and use more simplistic language than previous requirements.

The two Codes of Conduct (Code for Firms and Code for Solicitors) set out the ‘standards’ firms and individual solicitors should achieve, eg ‘You do not waste the court’s time’ or ‘You keep up to date with and follow the law and regulation governing the way you work’. The introduction to the Code for Solicitors describes the provisions as ‘standards of professionalism’ that the SRA and the public expect of individuals authorised by the SRA. For more guidance on the Code for Solicitors, see below: SRA Codes of Conduct.

The Standards and Regulations are more than 300 pages shorter than the SRA Handbook 2011, which they replaced. The SRA argues that this makes them simpler and easier to understand, although it also means a lot of the detail has been lost. Part of the reduction in size is attributable to:

  • the removal of indicative behaviours from the Codes of Conduct, and
  • the removal of guidance notes from the Standards and Regulations themselves

This does not mean there is no guidance on the Standards and Regulations. The Standards and Regulations are accompanied by guidance in a variety of formats. See: Supporting guidance below.

SRA Principles

The SRA Principles set out the ethical standards expected of all those regulated by the SRA, including in-house solicitors. All sections of the SRA Standards and Regulations should be read in conjunction with the seven SRA Principles. These are mandatory and require you to act:

  • in a way that upholds the constitutional principle of the rule of law, and the proper administration of justice
  • in a way that upholds public trust and confidence in the solicitors’ profession and in legal services provided by authorised persons
  • with independence
  • with honesty
  • with integrity
  • in a way that encourages equality, diversity and inclusion
  • in the best interests of each client

You should use the SRA Principles as your starting point when dealing with ethical issues. Where two or more Principles conflict, precedence is given to Principles that safeguard the wider public interest (such as the rule of law, and public confidence in a trustworthy solicitors’ profession and a safe and effective market for regulated legal services) over an individual client’s interests.

The Principles apply both in and out of practice. You are expected to uphold high ethical standards in all aspects of your personal life as well as your professional life. The SRA may take action against in-house solicitors for actions outside of work that, for example, display a lack of integrity, or dishonesty, or a lack of respect for equality and diversity, or which undermine the public trust in the legal profession.

Codes of Conduct

There are two Codes of Conduct: a Code for Firms and a Code for Solicitors.

Code for Firms

The SRA Code of Conduct for firms only applies to entities regulated by the SRA, so will only apply to in-house practice if your employer sets up a regulated law firm as part of its offering.

SRA Code of Conduct for Solicitors

The SRA Code of Conduct for Solicitors applies to all solicitors, RELs and RFLs whether they are working in-house or in private practice. You are personally accountable for compliance with this Code.

The Code for Solicitors applies irrespective of the individual’s role or the environment or organisation in which they work (subject to the Overseas Rules, which apply to practice overseas). It comprises eight sections:

  • maintaining trust and acting fairly
  • dispute resolution and proceedings before courts, tribunals and inquiries
  • service and competence
  • client money and assets
  • business requirements
  • conflict, confidentiality and disclosure
  • cooperation and accountability
  • when you are providing services to the public or a section of the public—this section applies to in-house solicitors who provide non-reserved legal services to the public

See further Lexis®PSL Practice Note: SRA Code of Conduct for Solicitors, RELs and RFLs—for in-house lawyers.

SRA Accounts Rules

The Code for Solicitors prohibits any solicitor from personally holding client money unless they work in a regulated law firm, or in an organisation of a kind prescribed by the SRA, or, with certain restrictions, if they are a ‘freelance solicitor’.

The 2019 SRA Accounts Rules only apply to regulated law firms and it is no longer possible for an in-house solicitor to hold client money in their own name, eg when working on property sales, unless they work in a non-commercial body or ‘prescribed organisation’ (broadly, a not for profit body, trade union or community interest company). This does not mean your employer cannot hold client money, subject to any applicable regulatory or professional rules, but it is generally not possible for you to hold client money in a solicitor’s client account if you work in-house.

Supporting guidance

The Standards and Regulations are accompanied by guidance in a variety of formats.

The following list sets out some of the key guidance issued by the SRA relevant to in-house practice:

Area of regulation

SRA guidance

The Principles

Acting with integrity

Public trust and confidence

Code of Conduct

Guidance on the SRA’s approach to equality, diversity and inclusion

Firm authorisation

Does my business need to be authorised?

Can my business be authorised?

Does my employer need to be authorised by an approved regulator?

Individual authorisation

When do I need a practising certificate?

Unregulated organisations

Unregulated organisations—Conflict and confidentiality

Unregulated organisations—for employers of SRA-regulated lawyers

Unregulated organisations - giving information to clients

Breaches, reporting and enforcement

Guidance on the SRA’s approach to financial penalties, August 2013

Topic guide: criminal offences outside practice

Topic guide: use of social media and offensive communications

Topic guide: driving with excess alcohol convictions

Topic guide: competence and standard of service

Topic guide: price transparency

Reporting and notification obligations

Overseas lawyers

Registered Foreign Lawyers

Money laundering

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

Special bodies

Not for profit sector—summary

SRA Standards and Regulations guidance for the not for profit sector

Breach of the Standards and Regulations

Responsibility for compliance with the Standards and Regulations

In-house solicitors are personally accountable for their own compliance with the Code for Solicitors and any other SRA requirements that apply to them. They must also be able to justify their decisions and actions in order to demonstrate compliance with their obligations under the SRA’s regulatory arrangements.

Breach reporting

The threshold for reporting breaches to the SRA is expressed as ‘serious breach’. The obligations are as follows and they apply to in-house solicitors:

Obligation

Comment

Promptly report to the SRA (or another approved regulator, as appropriate), any facts or matters you reasonably believe are capable of amounting to a serious breach of regulatory arrangements by any person regulated by the SRA (including you).

This makes it clear that there is no need for a conclusion to be reached that a serious breach has occurred. It is sufficient that there are facts or matters that you reasonably believe are capable of amounting to a serious breach.

Promptly inform the SRA of any facts or matters you reasonably believe should be brought to its attention in order that it may investigate whether a serious breach of its regulatory arrangements has occurred or otherwise exercise its regulatory powers.

This suggests that, even if there is no obligation to report on the basis of ‘a reasonable belief of facts or matters capable of amounting to a serious breach’, you should still report matters you reasonably believe should be brought to the SRA’s attention.

This could apply where the person making the report does not have access to the information they would need to form a reasonable belief, eg where the concern relates to an external firm or an in-house lawyer in another organisation.

For more information on the concept of serious breach and your breach reporting obligations under the SRA Standards and Regulations, see Lexis®PSL Practice Note: Reporting breaches to the SRA—in-house lawyers.

Enforcement

The SRA’s enforcement function deals with breaches amounting to misconduct. The SRA has various sanctions and controls at its disposal if required, including:

  • letters which contain advice and warning
  • financial penalties
  • referral to the Solicitors Disciplinary Tribunal

See further Lexis®PSL Practice Note: SRA enforcement strategy.