Philip: Obvious benefits
The Solicitors Regulation Authority (SRA) does not expect acting as regulator for the Chartered Institute of Legal Executives (CILEX) to “affect the identity of the solicitors’ profession or the way it is regulated”.
Outlining detailed plans for the regulation of CILEX lawyers should the organisation go ahead with switching regulator from CILEx Regulation Ltd (CRL), the SRA said the move would “simplify the complex regulatory landscape, making it easier for consumers to navigate”.
CILEX, which says around 75% of its members already work for SRA-regulated firms, launched its plans for the switch earlier this month, arguing that it was in the public interest and would save money for members, who were paying more to be regulated as individuals than solicitors. CRL strongly opposes the move.
The SRA said its board agreed with CILEX that regulating its members had the “potential to deliver tangible benefits to consumers of legal services and the wider public”.
In its introduction to the consultation, the regulator said: “We do not expect these changes to affect the identity of the solicitors’ profession or the way it is regulated.
“Our proposals maintain a distinct entry route to authorisation as a legal professional for CILEX members, and a separate code of conduct as our basis for regulating those members.
“The existing pathway into the solicitors’ profession – the Solicitors Qualifying Examination – and our principles and codes of conduct for solicitors and SRA firms will remain separate from those for authorised CILEX lawyers.”
It stressed that there would be no cross-subsidy from solicitors for the regulation of CILEX members.
The SRA said seven of the 19 law firms regulated by CRL were “already eligible” for regulation by it, because their owners and managers included solicitors or non-authorised people. The SRA proposed to passport these firms across to being regulated by the SRA in the same way as other law firms.
The remaining 12 CILEX firms, which were owned and managed only by CILEX lawyers, would be regulated as ‘authorised CILEX bodies’ and during a transition period the SRA would work with CILEX to put in place “suitable arrangements” before the necessary legislation could be passed to allow it to regulate them.
The 40 law firms regulated by CRL for the Association of Chartered Certified Accountants (ACCA) as CILEX-ACCA firms would retain their separate status as SRA-ACCA firms, operating as they did in a “specific and niche context”.
The SRA said it proposed to regulate as ‘authorised CILEX lawyers’ only those people who needed authorisation to provide specified legal services without supervision, and not students or paralegals for the time being.
This group is chartered legal executives, other CILEX members with practice rights, CILEX-ACCA probate practitioners, and Crown Prosecution Service associate prosecutors.
There would be a separate code of conduct for CILEX lawyers, “closely aligned to the standards that apply to solicitors”, currently taking the form of a draft SRA CILEX code of conduct.
The SRA said it recognised the role of CILEX in developing and delivering education and the CILEX Professional Qualification, but would “apply the same approach to oversight of continuing competence as we currently apply to solicitors”.
The CILEX Authorised Practitioners Directory would be renamed the Authorised CILEX Lawyers Register. Authorised CILEX law firms would be listed on the Solicitors Register.
The SRA said it would take on CRL’s powers to investigate, reprimand, fine and, where necessary, control and restrict the practice of authorised CILEX lawyers. It could not refer CILEX lawyers or firms to the Solicitors Disciplinary Tribunal, so they would treated in the same way as alternative business structures.
Disciplinary hearings would be held by the SRA in private, unless the panel decided otherwise, and there would always be a hearing where the sanctions were cessation or suspension of a CILEX lawyer’s membership.
Like non-solicitor ABS owners or individuals, authorised CILEX lawyers could be fined up to £50m and their firms up to £250m.
The SRA would work with CILEX to secure a statutory instrument to give CILEX lawyers the same rights as solicitors to appeal against disciplinary decisions to the High Court.
On indemnity insurance, the SRA said all incorporated law firms, including CILEX firms, would be required to have a minimum cover limit of £3m.
A statutory instrument would be needed to give the clients of authorised CILEX firms and self-employed CILEX lawyers access to the SRA Compensation Fund. The SRA accounts rules would apply to CILEX firms.
The regulator said it expected to achieve “efficiency savings” in a range of governance and operational areas by regulating CILEX lawyers.
It should be able to provide “steady-state regulation of authorised CILEX lawyers” at a cost “similar to, and potentially lower than, the current arrangements”.
Paul Philip, chief executive of the SRA, commented: “Bringing together the regulation of solicitors and authorised CILEX lawyers has obvious benefits in terms of simplification and consistency of regulatory processes and procedures and more consistent protection to the public.
“We believe the changes outlined in our consultation will enable this to happen, while also allowing for a smooth transfer of responsibilities.”
Any change would ultimately require approval by the Legal Services Board and the SRA said it would not come into effect until next summer at the earliest.
In the Law Society’s first comment on the prospect of the transfer, president Lubna Shuja said: “While the SRA and CILEX have said they believe that the proposals will benefit consumers, our view is that there is a higher risk of causing greater confusion for when they are choosing the appropriate legal provider to meet their needs.
“This consultation is an important opportunity for solicitors to make their views known and have a say on what is being proposed for CILEX lawyers. Whilst we appreciate that many of our members hire, supervise and work with CILEX lawyers, we are also mindful that many do not.”
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