Regulatory change is imminent for law professionals and law firms as the new SRA Standards and Regulations comes into force on 25th November.
In just a few days, the 2011 SRA Handbook will be replaced with new standards, significantly reduced in length from 450 pages to 130 pages.
Even though it’s 2011 predecessor has been stripped down in length it still continues with a less prescriptive approach to regulation by the SRA.
However, the risk to solicitors and law firms is that this kind of regulation approach is ‘open to interpretation’ and can be a double-edged sword situation where there are no right or wrong answers.
The introduction of new standards allows solicitors greater flexibility in how they work and simplify accounting rules.
The account rules are much shorter and have decreased from 52 rules to 13 considerations, SRA regulated firms still need to keep themselves abreast of crucial changes that will affect their working day.
From the 2011 handbook, law firms may transfer money for disbursements they are owed from fees and searches in order to reimburse a firm for the loss they have incurred.
However, 4.3 of the Accounts Rules will prohibit a law firm from making a client account withdrawal without first notifying a client. The rule states:
4.3 Where you are holding client money and some or all of that money will be used to pay your costs:
a) you must give a bill of costs, or other written notification of the costs incurred, to the client or the paying party;
b) this must be done before you transfer any client money from a client account to make the payment; and
c) any such payment must be for the specific sum identified in the bill of costs, or other written notification of the costs incurred,
Solicitors will now need to provide a comprehensive bill of all costs, including any disbursements which will be included as costs during this process. Law firms will need to be methodical and transparent with the fees and disbursements they may charge to avoid conflict.
Law firms will also need to ensure they have a precise figure in order to conform to Section C. It will, therefore, become crucial for law firms to become a lot more detailed about the costs, fees, and disbursements which could impact the overall total.
To comply with the new account rules coming into force, it may be prudent for law firms to outsource to a third party for legal cashiering services who can enable law firms to remain SRA compliant.
This allows solicitors to concentrate on their clients and become more efficient by easing the administrative burden rather than spending endless time fretting over the new rules and whether their actions are compliant or not.
