rblog

A fresh outlook

By Debra Malpass on 25 July 2017

July has been another exciting and productive month for the Research and Analysis team. We have been working hard to publish our annual Risk Outlook. This is accompanied by an update to our online tool. We will also be broadcasting short periscope videos throughout the week. To watch these, you can follow the SRA onTwitter @sra_solicitors, or view them below.

The Risk Outlook provides an overview of priority risks to providers and users of legal services which, if not managed, risk harm to the public, the rule of law and the proper administration of justice. We believe a better shared understanding of these risk areas should make it easier for everyone to respond appropriately, and might present opportunities to prepare and get ahead of the curve.

It includes all the usual information—why each risk matters, recent trends, the actions we are taking and those that firms can take. Since key changes are taking place in some of the risk areas we cover, we have also introduced new 'spotlight on' sections to shed a little more light on aspects of these critical or evolving risks.

New risk – Investment schemes

We have added one new risk to the Outlook this year—Investment schemes. Promoters of questionable investment schemes believe that if they can involve a solicitor, potential investors will feel more likely to trust them. We have seen schemes such as land banking and hotel room leasing, where investors have lost large sums of money. With interest rates and returns on conventional investment schemes being so low recently, some people will try to take advantage. This is reflected in the increasing number of cases we've seen recently. Our last two warning notices have been written on this subject, in September 2016 and June 2017.

The still significant seven

The other seven risks featured in the 2017/18 Risk Outlook have been covered previously, but they are as important as ever. The threats posed by these are always changing and evolving, and in some cases rules and guidance around them are currently being updated. These risks are briefly outlined below.

Lack of access to legal services - We remain committed to removing barriers to legal services, and we are reforming our regulation to improve access to justice. We have given special attention to this subject in our recently published paper—'Improving access – tackling unmet legal needs'.

Standards of service and considering vulnerability - We set the ethical and professional competence standards for solicitors, and take action when those standards are not met. Vulnerable people may need extra support or consideration from solicitors, and we monitor this very closely.

Information security - With recent, high-profile cyber attacks on organisations such as the NHS this subject has been getting a lot of media attention. But that is just part of the picture. The introduction of General Data Protection Regulation (GDPR) next year will tighten up information-handling rules. We need to make sure that people are aware of the risks, and their obligations, and are getting proper guidance to stay protected.

Protecting client money - Solicitors are often entrusted with large amounts of money, and their obligation to protect this money is vital to trust in the profession. When client money is lost or stolen the consequences can be very severe for consumers, law firms and the profession as a whole.

Money laundering - Solicitors are a critical line of defence in making sure that criminals are not able to legitimise money raised through illegal activity, or fund further criminal or terrorist activity. New legislation has just been passed to help combat this, and firms need to keep up with these changes.

Independence and integrity - Public confidence in solicitors to act responsibly, and to the high professional standards expected of them, is essential. We have seen an upward trend in the number of breaches of this confidence reported to us, which we view very seriously.

Diversity in the profession - A diverse and inclusive profession benefits everyone, encouraging high standards, independence and accessibility in legal services. Diversity is improving, but should remain a key focus for all of us.

We know many law firms find our Risk Outlook and updates to be valuable resources. We will be releasing supporting papers throughout the year, on these and other emerging risk topics.

We hope that the Risk Outlook will help you make better informed decisions. We continue to reform our regulation to reduce unnecessary burdens while focusing on real issues for the interests of consumers. But it is important that those we regulate can manage risks while providing effective services to those that need them.

Debra Malpass