"Errors, like straws, upon the surface flow; he who would search for pearls must dive below." So wrote John Dryden in 1678. And so, too, every solicitor makes minor mistakes in his day-to-day work – inconsequential errors and misjudgements. But so what, you may ask, if beneath the surface the client is getting the pearls of a first-rate job? And let us not forget that the standard is generally very high. Clients are, by and large, well served.

However, there is a sense that our new regulator and critic, the Solicitors Regulation Authority (SRA), is now a guardian of the quality of solicitors' work and not just of the manner in which it is done. Rule 1.05 of the code of conduct states: "You must provide a good standard of service to your clients."

This is much more direct than the equivalent wording in the old Solicitors' Practice Rules 1990 which spoke of "not [doing] anything… which compromises or impairs… the solicitor's proper standard of work". And the guidance to the code goes further: "You must provide a good standard of client care and of work, including the exercise of competence, skill and diligence. Disciplinary action will not always follow where breaches of this duty are minor and isolated."

Is this a 'land grab' for the code of conduct and the SRA? Will every reported judgment of negligence result in a disciplinary investigation? Do solicitors themselves now have to report any serious allegations of negligence, whether against themselves or others, to the SRA under rule 20.04 of the code? What is the proper scope of the regulator's role in relation to negligence?

The answer to these questions – with significant consequences for solicitors and their professional indemnity insurers – is not entirely clear. It is tempting to think that there is a clear divide between the regulatory world and the liability world and that the regulator has no role in the latter. The introduction to the SRA's June 2007 edition of the code gives little comfort to this view. There the core duties are "mandatory obligations with which solicitors must comply… and the SRA… intend to place them at the forefront of its regulatory activity".

In practice, the regulation and liability worlds appear to overlap most frequently where there is an element of dishonesty or a breach of the accounts rules. Of course, in each case there is a separate and discrete provision relating to that conduct. Dishonesty is covered by core duty 1.02 – "you must act with integrity" – and the accounts rules by the Solicitors Accounts Rules 1998. Perhaps this is fair enough. Each appears to contain some proper degree of regulatory character.

But what of straight carelessness with nothing more? The Legal Complaints Service, as regulator of inadequate professional services, cannot avoid making service complaint awards which also encompass some element of breach of duty. But its jurisdiction is not disciplinary and is currently limited to £15,000.

The Office for Legal Complaints will ultimately preside over a much higher jurisdiction for all forms of redress, including breach of duty. This will start at least at £30,000 and will undoubtedly have a more regulatory feel to it. Complaints will be resolved by reference to "what is, in the opinion of the ombudsman… fair and reasonable in all the circumstances of the case". This may well see the establishment of an entirely new body of regulatory compensation law similar to that under the financial services scheme. However, it will still be a non-disciplinary regime with discipline remaining primarily with the approved regulator.

This leaves open the question of the scope of the SRA's role for dealing with duty of care matters such as misconduct and it is particularly important for solicitors and their insurers. Firstly, there is the issue of defence costs cover for disciplinary proceedings. This is typically quite expensive and adds to the burden for insurers of this type of risk. This in turn could push up the price of the product at some point in the future. Secondly, there is the effect of such proceedings on the conduct of liability claims. It is usually advantageous to have liability claims heard before any misconduct proceedings. However, it is not easy to persuade the regulator to postpone the prosecution of an investigation until the outcome of a civil claim. A broadening of the perceived scope of the code of conduct into negligence matters could therefore be unhelpful and ultimately increase the cost of insurance.

It would be surprising if the SRA got involved in individual cases of negligence where no other regulatory or misconduct factor was present. Apart from anything else it would perhaps sit uncomfortably with its risk-based approach. That is not to say that the standard of skill and care offered by the profession as a whole is outside the scope of its regulatory function, but there is a path to be trodden.

Among the most widely publicised aspects of the code are the requirements relating to the supervision and management of the firm and client's work in rule five. Is this likely to create supervision misconduct matters for individual acts of negligence by assistant solicitors or others? Probably not. The focus is on the establishment and implementation of systems rather than on isolated incidents when the systems may not have worked.

But there has been concern in relation to the requirement to be able to demonstrate the required systems. This is more so in relation to smaller practices; the perception is that larger firms will already have such systems in place. Of course, there are benefits for practices of all sizes. Insurers have always been interested in this area in their underwriting decisions and the ability to demonstrate systems to the SRA may well have knock-on benefits with insurers. The same perhaps applies to the client care provisions in rule two. Demonstrating compliance with the requirement to identify and record the client's objectives and explain your responsibilities and level of service is bound to improve the presentation of a solicitor's proposal to the insurer.

Scope of duty arguments are a key issue in a great number of professional negligence claims. However, great care should be taken in defining the scope of the legal work to be undertaken and not to take on, whether expressly or implicitly, any responsibility for the commercial aspects of any transaction.

So these areas have potentially beneficial aspects for the solicitor and his insurer. There are a number of potential danger areas in the code. The new rule three on conflicts creates two situations in which solicitors may act in situations of conflict but there are difficult compliance issues that require fine judgement. In addition, it is not clear how the courts would mesh the common law and the rules in any liability case. Equally, it appears that there is quite common non-compliance with rule nine on referrals of business.

So what of the "errors, like straws"? We will have to wait and see. But clients and the regulator cannot be expected to dive below the surface for our pearls. At least some of the straws will be have to be cleared away.