Solicitors Regulation Authority

The Solicitors Regulation Authority (SRA) will launch its new set of Standards and Regulations (often referred to as the "StaRs") on November 25, 2019.

Unsurprisingly, there are some changes in content and structure due to the simplification and rationalisation of the existing rules, but it is actually the more nuanced changes, in terms of underlying policy and overall regulatory approach, which firms and lawyers should be focusing on. For the StaRs really usher in a new era in legal regulation, where there will be a distinct shift in the SRA's priorities as a regulator and in what it expects of the firms it regulates.

A key change is that there will be greater emphasis in future on the ethical obligations of firms the SRA regulates. The seven SRA Principles set out the high-level standards of ethical behaviour expected.

Crucially, these principles will apply both in respect of professional life and, where appropriate, life outside of work, and they apply to all those the SRA regulates – individual solicitors, registered European lawyers, registered foreign lawyers, and law firms, as well as all their non-solicitor employees (including those with management responsibilities).

The SRA's ambition is to create an ethical culture within firms, where everyone is encouraged to become more aware of their ethical obligations and the need to be able to exercise professional judgement and be accountable for their own actions. Firms will be expected to support all their staff to comply with these obligations and to foster a firm culture based upon them. 

On top of this, by creating a separate Code of Conduct for Firms and simplifying the Code of Conduct for Individuals, the message is quite clear that the SRA expects all those it regulates to understand what is expected of them.

In this new world, there will be very little room for excuses premised upon a lack of understanding as to the applicable ethical and professional obligations. The days are long gone when a firm might have been able to turn a blind eye to the suspect conduct of its employees or managers on the basis that responsibility to take any actions lays solely at the door of the SRA. Going forward, the SRA expects firms to take more responsibility for the actions or inactions of  employees and to promote a culture where allegations of misconduct are taken seriously and investigated at firm level, and where prompt and early engagement with the SRA becomes routine practice. 

The teeth in all of this comes in the guise of the SRA's revised Enforcement Strategy, launched in February 2019, which signposted what the SRA sees as the 'big ticket' issues, and where the SRA intends to focus its regulatory action.

It includes detail of what the SRA will take into account when determining the seriousness of any concerns raised about a failure to meet its standards and makes clear that the purpose of the principles and the codes of conduct is to show "what a competent and ethical legal profession looks like". It leaves no doubt that its regulatory approach is to "promote a culture in which ethical values and behaviours are embedded"; in fact, this is one of three main objectives, alongside ensuring a strong, competitive and highly effective legal market; and ensuring a focus on quality and client care.  

So, legal professionals and their employer firms must heed the writing on the wall – regulatory focus has shifted. While individuals must still comply with their professional and ethical obligations, a clear responsibility will be placed at the door of firms to promote a culture where individuals are empowered to make good decisions and are able to justify why they made them. 

This is already evident, arguably, in recent enforcement action the SRA has taken, where firms are carrying the can. Under the new StaRs regime, this is only likely to happen more.

Iain Miller is a partner and Jessica Clay a senior associate in the legal services regulatory team at Kingsley Napley.