The following article was contributed by Catherine Dixon, chief executive, Law Society of England and Wales
The number of in-house solicitors is on the up. This year it’s one in four practitioners. By 2020 Law Society research indicates that proportion will have increased to one in three.
This is a core community within the Law Society membership and, as I know from my own career in-house, they have a very particular set of circumstances.
In recent weeks we’ve been working to publicise proposed changes to the Solicitor Regulation Authority (SRA) Handbook which – if they go through – will have a huge impact both on purchasers of legal services and on the reputation of our profession.
We’re calling on solicitors working in the full range of organisations – in local authorities, corporates, solicitors firms and more – to give their feedback on these changes before the SRA consultation closes on 21 September.
It’s particularly important in-house solicitors feedback in substantial numbers because the changes will have a particular impact on them.
On the one hand the proposal to end the separation of core regulatory provisions for in-house solicitors is something that is welcome.
However the proposed code may include provisions which should only apply to solicitors in private practice or vice versa. We question whether this has been taken into account and believe the new rules should be nuanced to avoid any unintended consequences.
“In-house lawyers will face increasing conflict of interest, potential liability exposure and advice they provide may not be covered by legal privilege”
Currently there are no in-house specific provisions in the code – and, of course, in-house roles are very different from private practice.
The rationale behind this part of the proposal is that the SRA wishes to enhance access to justice for consumers. In practice, this change will mean that any in-house solicitor can provide advice and assistance to the public provided they are not carrying out one of the reserved legal activities.
In the case of local authority in-house solicitors, this may be attractive as it could permit them to provide advice to other bodies and authorities without having to obtain a waiver.
However, this will result in increasing conflict of interest situations, with the need to comply with the Code of Conduct for Solicitors. They could also face potential liability exposure, which will realistically have to be covered by their employer’s indemnity. In addition, advice they provide may not be covered by legal professional privilege.
We have received specific feedback from in-house lawyers working in local government, who are not in favour of the new proposals not least because they remain concerned about the lack of clarity as to whether they can provide service to more than one local authority or body. The SRA does not address this issue.
Outside of local authorities, it is hard to envisage in what circumstances in-house solicitors would wish to act for third parties.
In any case, many employers prohibit employees taking on other work as it is not in their interests.
More widely the impact of the SRA’s proposals could result in two tiers of solicitors.
Why two tiers? On the one hand the solicitors who work in regulated entities, alternative business structures and in-house will continue to provide full client protection (with the exception of in-house) including professional indemnity insurance (PII), full recourse through the legal ombudsman (LeO) and the compensation fund thereby offering clear redress in the event things go wrong.
They will also be subject to regulatory rules on conflict. The advice these solicitors give will be subject to legal professional privilege which means that they can speak confidentially to their solicitor without the risk that they or the solicitor will be forced to disclose the conversation or correspondence passing between them.
However, on the other hand, advice to the public from solicitors in unregulated organisations may not be legally privileged which would undermine this vital client protection. These solicitors will not be obliged to have professional indemnity cover nor will they be subject to regulatory rules on conflict, though common law rules will apply, which means that different conflict rules will apply depending on where the solicitor works.
Their clients won’t be able to access the compensation fund and it is unclear whether they will be able to seek redress from the legal ombudsman because of disclosure rules which won’t apply to the unregulated organisations. The bottom line is that their clients may have little protection compared to clients of solicitors working in regulated entities.
All this means that clients purchasing legal services simply won’t know what protection they are getting and, ultimately, this will shake confidence and affect the standing of the solicitor profession at home and abroad.
During the past few weeks – and in the weeks to come – the Law Society has been organising meetings with solicitors so we can get direct feedback on what they think about the SRA plans.
The Law Society is calling on all solicitors to respond to the consultation by the SRA’s deadline of 21 September and to provide your views on the proposals to the Law Society.
For more background please click here and email your response to regulation@lawsociety.org.uk
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