SRA Reform Proposal allows freelance legal services

Today’s Conveyancer Discussion Panel: SRA Reform Proposal allows freelance legal services

Solicitors Regulation Authority (SRA) recently published their package of reforms in which it was proposed that solicitors should be allowed to deliver reserved legal services on a freelance basis. 

However, freelance status means that solicitors would not be able to hold clients’ money or employ staff, and they must have appropriate indemnity insurance and also inform clients which regulatory protections apply.

The regulator’s proposal aim is to make it easier for solicitors to provide legal services to the public and in turn, the consumers have much better access to those services.

Commenting on SRA’s proposed reform is Harvey Harding of PMPL. He said: “It is clear that the legal services market is changing and in my opinion long overdue for change.  In 2015 Susskind coined the phrase the ‘grand bargain’ in effect referring to the closed shop/monopoly that has been created and permitted due to reserved activities being trusted to only the few.

It is also the case that as a society, the traditional 9-5 way of working at a desk is changing, due to lifestyle changes as well as a need (and want) to, for example continue working around a young family, so the flexibility that may be created by such changes could also be of benefit to the legal community as well as the public.

The closed shop as referred to above – to an extent is true and can therefore stymie development and as a consequence have an effect on quality of service, price of service and delivery of service. Opening up the sector could allow for a greater level of access to legal knowledge and assistance, a freedom of information and a drive towards innovation.  This could of course have an effect on traditional service delivery by increasing competition, so could lead to a real change within existing firms to keep up.  This is of course the bigger picture and not only relates to the changes to freelance activities for solicitors but potentially in the future looking at unbundling those services further as to what could be carried out by non-solicitors.

Some benefits to individual lawyers would be that they could continue to practice without the shackles of the traditional setting and on the flip side allow both consumers and business consumers to focus on their needs in the way they would wish them to be delivered and when they needed them.

As a solicitor it could allow the solicitor’s profession to compete on a level playing field with barristers with regard to advocacy, via direct instruction, it could create greater freedom for non-legal and pseudo-legal businesses to bring in house their litigation as required on a flexible basis (such as debt collection, uninsured loss recovery, some defence work).

At this stage, due to the nature of conveyancing and its focus around client and lender funds, there may not be an immediate impact, but with either third party client account services, or escrow services this could change in the future.

There are risks in terms of professional conduct, quality, transparency and insurance but the key is good clear regulation and appropriate controls from the regulator that sits behind it. It will also be interesting to see what the PII provider’s appetite for cover is.”

Rob Hailstone of Bold Legal Group comments further. He said: “With insurance in mind, I discussed this issue James Frost of insurance brokers the JLT Group.

A freelance solicitor will hold their own personal practicing certificate and will be liable to up hold the standards of a solicitor however they will not be working in a firm that is itself regulated and so there will be no regulated structure to ensure adequate supervision. A freelance solicitor would not be able to employ staff or hold client money despite insurance because they will not be working in a regulated entity.

In addition, the SRA are not defining what ‘appropriate insurance’ is and will not be establishing minimum terms and conditions of insurance for freelance solicitors. It will be for the solicitor themselves to decide what insurance is appropriate having regard to the nature and type of work being carried out.

This means that the freelance solicitor can purchase professional indemnity policy from any insurer authorised to provide insurance in the UK. This raises potential issues for the freelance solicitor as most will just look at the indemnity limit that is appropriate for them whilst potentially forgetting about the extent of the policy cover itself.  At present the SRA minimum terms define the extent of the cover and these terms are the widest available to any professional. As minimum terms would not apply to ‘freelancers’ the insurer would be free to use any policy wording that they wish.

For a freelance solicitor the insurers could for example use a policy wording that is limited to respond to negligence only. In the Dreamvar case this would have meant that no cover would have been available as there was no finding of negligence the claim hinged on a breach of trust. Another example might be non-negligent breach of an undertaking for which of course there is strict liability.

Should a solicitor look at becoming ‘freelance’ then they will need to be very careful when purchasing insurance.”

 

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