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Rule 21: Separate businesses

 

The Solicitors' Code of Conduct 2007 has been replaced on the 6 October 2011 by the SRA Code of Conduct 2011 as part of the introduction of outcomes-focused regulation.

Go to SRA Handbook

Rule 21 of the Code of Conduct was amended on 31 March 2009 as part of a general updating of the rules to introduce firm-based regulation and legal disciplinary practices as provided for in the Legal Services Act 2007.

 
 

Introduction

A "separate business" is a business which is not regulated by the Solicitors Regulation Authority but which provides "solicitor-like" services. The purpose of rule 21 isa recognised body, a recognised sole practitioner, an authorised non-SRA firm or a firm within 12.01(2)(a)-(d) or 12.02(2)(a)-(d) but which offers a service or services that could properly be offered by a recognised body. Rule 21 regulates the interface between the practice of a solicitor and the operation of a solicitor's separate business:

  • to ensure that members of the public are not confused or misled into believing that a business carried on by a solicitor,or REL or RFL is regulated by the Solicitors Regulation Authority or another approved regulator when it is not;

  • to ensure that the protections afforded to the clients of practising lawyers are in place in relation to certain mainstream legal services; and

  • to prevent a solicitor severing part of a case or matter in such a way that the client loses statutory protections.

The rule as it applies to your overseas practice is modified by 15.21.

Rule

21.01 General

  • (1)

    If you are practising from an office in England and Wales as a solicitor,or an REL, or as an RFLwho is a partner in an MNP, a director of a or recognised body,which is a company or a member of a recognised body which is an LLP, or if you are a manager or employee of a recognised body, or an employee of a recognised sole practitioner, you must comply with the provisions of this rule in relation to:

    • (a)

      services which may not be provided through a separate business;

    • (b)

      services which may be provided through a separate business or (subject to these rules) through a firm or in-house practice; and

    • (c)

      services which fall outside the scope of a solicitor's practice but which may be provided in conjunction with a firm or in-house practice.

  • (2)

    This rule applies to your involvement in any separate business whether the separate business is in England and Wales or outside the jurisdiction.

  • (3)

    This rule also applies to a recognised body in relation to an interest held in another body corporate which is not a recognised body.

  • (43)

    For the avoidance of doubt, in this rule "practising" includes practising as an in-house solicitor or an in-house REL.

21.02 Services which may not be provided through a separate business

  • (1)

    Subject to (2) below, you must not provide any of the following services through a separate business:

    • (a)

      the conduct of any matter which could come before a court, tribunal or inquiry, whether or not proceedings are started;

    • (b)

      advocacy before a court, tribunal or inquiry;

    • (c)

      instructing counsel in any part of the UK;

    • (d)

      immigration advice or immigration services;

    • (e)

      any activity in relation to conveyancing, applications for probate or letters of administration, or drawing trust deeds or court documents, which is reserved to solicitors and others under the Solicitors Act 1974;

    • (f)

      drafting wills;

    • (g)

      acting as nominee, trustee or executor in England and Wales;

    • (h)

      legal advice not included above; or

    • (i)

      drafting legal documents not included above.

Exceptions
  • (2)

    The provisions of (1) above do not apply to prohibit you from providing services through a separate business:

    • (a)

      which carries on your practice as a lawyer of another jurisdiction;

    • (b)

      which carries on your business as a trade mark agent, patent agent or European patent attorney;

    • (cb)

      which carries on your business as a parliamentary agent;

    • (dc)

      which is a wholly owned nominee company operated as a subsidiary but necessary part of the work of a separate business providing financial services; or

    • (ed)

      which provides legal advice and/or drafts legal documents within (1)(h) and/or (i) above, as a subsidiary but necessary part of some other service which is one of the main services of the separate business; or.

    • (f)

      which has no office in England and Wales, does not receive customers directly or indirectly referred from any firm through which you carry on your practice in England and Wales, or from any in-house practice you have in England and Wales, does not provide any services in relation to the UK; and does not provide executor, trustee or nominee services anywhere.

    However, you must comply with the requirements of 21.05 in relation to any such separate business.

21.03 Services which may be provided in conjunction with a firm or in-house practice

  • (1)

    The following services extend beyond, or fall outside, the scope of a solicitor's practice but you may provide such services in conjunction with a firm or in-house practice:

    • (a)

      practice as a qualified notary public;

    • (ba)

      educational and training activities; and

    • (cb)

      authorship, journalism orand publishing.

  • (2)

    SuchA services areprovided in conjunction with a firm or in-house practice of a solicitor, an REL, an MNP or a recognised body is not provided through a separate business for the purpose of this rule.

21.04 Services which may be provided (subject to these rules) either through a firm or in-house practice, or through a separate business

  • (1)

    You may provide the following services either (subject to these rules) through a firm or in-house practice, or through a separate business:

    • (a)

      alternative dispute resolution;

    • (b)

      financial services (except those that cannot form part of a solicitor's practice);

    • (c)

      estate agency;

    • (d)

      management consultancy;

    • (e)

      company secretarial services;

    • (f)

      acting as a parliamentary agent;

    • (g)

      acting as a trade mark agent, patent agent or European patent attorney;

    • (hg)

      practising as a lawyer of another jurisdiction;

    • (ih)

      acting as a bailiff;

    • (ji)

      acting as nominee, trustee or executor outside England and Wales; or

    • (kj)

      providing any other business, advisory or agency service which could be provided (subject to these rules) through a firm or in-house practice but is not included in 21.02.

  • (2)

    If you provide any service listed in (1) above through a separate business you must comply with 21.05.

21.05 Safeguards in relation to a separate business

  • (1)

    If you provide services through a separate business you must do nothing in the course of practice, or in the course of making referrals to the business or accepting referrals from the business, which would breach rule 1 (Core duties).

  • (2)

    You must ensure that the following safeguards are in place in relation to a separate business which offers or provides any of the services listed in 21.04(1):

    • (a)

      the separate business must not be held out or described in such a way as to suggest that the separate business is carrying on a practice regulated by the Solicitors Regulation Authority or another approved regulator, or that any lawyer connected with your firm is providing services through the separate business as a practising lawyer regulated by the Solicitors Regulation Authority or another approved regulator;

    • (b)

      all paperwork, documents, records or files relating to the separate business and its customers must be kept separate from those of any firm or in-house practice, even where a customer of the separate business is also a client of the firm or in-house practice;

    • (c)

      the client account or other account used to hold money for the clients of any firm or in-house practice must not be used to hold money for the separate business, or for customers of the separate business in their capacity as such;

    • (d)

      if the separate business shares premises, office accommodation or reception staff with any firm or in-house practice:

      • (i)

        the areas used by the firm or in-house practice must be clearly differentiated from the areas used by the separate business; and

      • (ii)

        all customers of the separate business must be informed that it is not regulated by the Solicitors Regulation Authority and that the statutory protections attaching to clients of a lawyer regulated by the Authority are not available to them as customers of that business;

    • (e)

      if you or your firm refer a client to the separate business, the client must first be informed of your interest in the separate business, that the separate business is not regulated by the Solicitors Regulation Authority, and that the statutory protections attaching to clients of a lawyer regulated by the Authority are not available to clientsthem as customers of the separate business; and

    • (f)

      if the separate business is an estate agency, then without prejudice to the provisions of these rules regarding conflicts of interests, neither you nor any firm through which you practise as a principal may act in the conveyance for the buyer of any property sold through the estate agency unless:

      • (i)

        the firm shares ownership of the estate agency with at least one other business in which neither you nor the firm have any financial interest;

      • (ii)

        neither you nor anyone else in the firm is dealing with or has dealt with the sale of the seller's property for the separate business; and

      • (iii)

        the buyer has given written consent to you or the firm acting, after your financial interest in the sale going through has been explained to the buyer.

Guidance to rule 21 – Separate businesses

  • 1.

    A separate business is a business which is not a firm (recognised body, recognised sole practitioner, authorised non-SRA firm or overseas law firm) or an in-house practice but which offers a service or services that could properly be offered by a firm or, subject to rule 13 (In-house practice), an in-house practice - for instance, title checks, searches, etc. for the provision of Home Information Packs.

  • 2.

    Providing a service through a separate business means having any active involvement in a separate business which provides that service – see the definitions of "separate business" and "providing a service through a "separate business" in rule 24 (Interpretation). You are not providing services through a separate business solely by virtue of being a non-executive director of, or having an insignificant shareholding in, a company which provides, for example, financial services.

  • 3.

    In England and Wales there is no legal impediment to a non-lawyer giving legal advice, drafting wills or administering estates, or running a business which provides such services. However, the client of a firm or an in-house practice has the protections afforded by these rules, the Solicitors Regulation Authority'sSRA's regulatory powers, the Compensation Fund and (if a firmrecognised body or recognised sole practitioner provides the service) indemnity insurance under the Authority'sSRA's compulsory indemnity scheme. The customers of a business which is not a firm or an in-house practice will not have the same protections.

  • 4.

    Rule 21 applies to you if you are a solicitor, REL or RFL practising from an office in England and Wales, or a recognised body, a manager of a recognised body, or an employee of a recognised body or recognised sole practitioner, practising in England and Wales. The rule does two things:

    • (a)

      it prohibits you, if you are practising in England and Wales as a solicitor or an REL, or as an RFL within the Solicitors Regulation Authority's regulation, from "hiving off" the kind of services a member of the public would expect you to provide as a lawyer regulated by the Authority, SRA or another approved regulator (i.e. core legal services) to a business which is not so regulated; and

    • (b)

      it requires you to institute safeguards in relation to other services which you are allowed to "hive off" (the kind of services a member of the public would not necessarily expect to be provided only by a lawyer regulated by the Solicitors Regulation AuthoritySRA but which are "solicitor-like" services).

    The above applies even if the separate business is overseas.

  • 5.

    The purposepurposes of the rule isare:

    • (a)

      to ensure that members of the public are not confused or misled into believing that a business is regulated by the Solicitors Regulation AuthoritySRA or another approved regulator when it is not;

    • (b)

      to ensure that the protections afforded to the clients of a practising lawyer or firm are in place in relation to core legal services; and

    • (c)

      to prevent a practising lawyer or firm severing part of a case or matter in such a way that the client loses statutory protections.

  • 4.6.

    If you are practising wholly outside England and Wales, the provisions of this rule do not apply to you but you must comply with 15.21(2) in relation to your involvement in any separate business.

  • 5.7.

    AsIf you are an in-house solicitor doing work permitted by rule 13 (In-house practice) you are not providing services through a separate business; but if, and you have a separate business in addition to your in-house practice you must comply with rule 21 or, if you are employed outside England and Wales, with 15.21(2).

Business as a professional not regulated by the Solicitors Regulation AuthoritySRA – 21.02(2)(a) and (b)

  • 6.8.

    Although you may not in general provide reserved litigation, advocacy, conveyancing and probate services, or immigration services,core legal services through a separate business, you may have a separate business as a parliamentary agent, trade mark agent, patent agent, European patent attorney, or as a lawyer of another jurisdiction. Such a business may undertake some of the activities listed in 21.02(1), butand21.02(2) states that you are not prohibited from having such a business. The safeguards for such a separate business as set out in 21.05are intended to make it clear that the business is governed by a different legal and regulatory regime from that governing services provided by solicitors.

  • 9.

    Note that a solicitor who was formerly an REL, when practising in the UK as a lawyer of an Establishment Directive profession, is subject to the rules of professional conduct and the SRA's regulatory procedures as if he or she were practising as a solicitor, and such a practice would not therefore be regarded as a separate business - see 15.01(2)(b)(v), 20.02(4) and 23.01(1)(e), and regulation 36 of the Establishment Directive Regulations.

Legal advice as a necessary and subsidiary part of another service

  • 7.10.

    The prohibitions on providing certain legal advice and drafting certainlegal documents through separate businesses do not apply when the advice or drafting is merely a necessary but subsidiary part of another service which you are allowed to provide through a separate business. An example would be a management consultancy business giving ancillary advice on obligations under the Data Protection Act 1998.

Executor, trustee and nominee companies

  • 8.11.

    You are not allowed to provide executor, trustee or nominee services in England and Wales through a separate business. An executor, trustee or nominee company operated in conjunction with the practice of a firm must be a recognised body, because:

    • (a)

      a company has a separate legal identity, so if a firm owns a company, and the company provides a service to the firm's clients, it is the company and not the firm that provides the service; and

    • (b)

      a company providing a service for clients of a firm will constitute a "business" for the purpose of rule 21, even if the company is dormant for Companies Acts purposes, and even if no charge is made to clients for its services.

  • 9.12.

    You are allowed to have a separate business which provides executor, trustee and nominee services outside England and Wales. If you do, you must put in place the safeguards required. You can, on the other hand, run an executor, trustee or nominee company which provides services only outside England and Wales as an overseas corporate firm within rule 12 (Framework of practice).

Companies providing company secretarial services

  • 13.

    Your firm may own a company whose purpose is to provide company secretarial services to clients of the firm. Such a company may either be operated as a legal practice (and must therefore be a recognised body), or it may be operated as a "separate business" (and must therefore be operated in compliance with rule 21 and may also need to be separately regulated by HMRC under the anti-money laundering legislation).

Service companies

  • 10.14.

    A service company operated for the purpose of providing services only to carry out administrative functions concerned with the running of the firm which wholly owns it, such as the employment of staff, the hiring of premises, furniture and equipment and general maintenance, is not a separate business, and does not require to be a recognised body because it is not regarded as practising.

  • 11.15.

    A company incorporated by an individual solicitor to provide that solicitor's services to a firm cannot be or in-house practice is not a separate business. If the circumstances of the individual and the company fulfil the requirements of paragraph (c)(iii) of the definition of an "employee" in rule 24, such a company will not be regarded as practising and so will not be required to become a recognised body.

Marketing and description of a separate business

  • 12.16.

    Under 21.05(2)(a) your separate business must not be held out or described in such a way as to suggest that the separate business is carrying on a practice regulated by the Solicitors Regulation AuthoritySRA or another approved regulator, or that any lawyer connected with your firm is providing services through the separate business as a practising lawyer regulated by the AuthoritySRA or another approved regulator. Unlike the more specific safeguards in 21.05(2)(b) to (f), this prohibition has a wide application and amounts to an absolute requirement to take all necessary steps to ensure that customers and third parties dealing with the separate business are not misled. However, it is not intended to prohibit you from running a separate business in association with your firm or mentioning your firm, or the fact that you are a lawyer, in connection with your separate business. The provision will have the following implications:

    • (a)

      You could not properly carry on your separate business under the same name as your firm, because that would create too strong a suggestion that the business, like the firm, is regulated by the Solicitors Regulation AuthoritySRA or other approved regulator. On the other hand, 21.05(2)21.05(2)(a) does not prohibit you from running your separate business in association with your firm, or using a similar or related name or "brand". However, in order to comply with 21.05(2)21.05(2)(a) you would need to differentiate properly the separate business from your firm and make it clear on the face of any notepaper or other publicity of the separate business using a similar or related name that the services of the separate business are not the services of practising lawyers.

    • (b)

      You could not properly market your separate business to potential customers on the basis that it is owned and run by practising solicitors and/or RELs, because that would create too strong a suggestion that the services of the separate business are provided by practising lawyers regulated by the Solicitors Regulation AuthoritySRA or other approved regulator. On the other hand, 21.05(2)21.05(2)(a) does not prohibit you from marketing your separate business on the basis that it is run and owned by persons who are qualified as lawyers – provided you make it clear that no lawyer involved in the separate business is practising as such through the separate business.

    • (c)

      SubruleRule21.05(2)21.05(2)(a) does not prohibit the use of the word "solicitor", "lawyer" or "attorney" in connection with your separate business. However, it would be a breach of 21.05(2)(a) if such a reference suggested that lawyers regulated by the Solicitors Regulation AuthoritySRA or other approved regulator practise through the separate business – so any such reference must be appropriately qualified so as to make it clear that the services of the separate business are not the services of practising lawyers. If the reference is in a letterhead or other publicity that statement should be in the same document.

Financial services

  • 13.17.

    Examples of financial services which cannot form part of a solicitor's practice (and which will not be covered by qualifying insurance under the Solicitors' Indemnity Insurance Rules) include banking, stockbroking and insurance underwriting.

7/1/2007 12:00:00 AM

Rule 21: Separate businesses

 

The Solicitors' Code of Conduct 2007 has been replaced on the 6 October 2011 by the SRA Code of Conduct 2011 as part of the introduction of outcomes-focused regulation.

Go to SRA Handbook

Rule 21 of the Code of Conduct was amended on 31 March 2009 as part of a general updating of the rules to introduce firm-based regulation and legal disciplinary practices as provided for in the Legal Services Act 2007.

 
 

Introduction

A "separate business" is a business which is not regulated by the Solicitors Regulation Authority but which provides "solicitor-like" services. The purpose of rule 21 isa recognised body, a recognised sole practitioner, an authorised non-SRA firm or a firm within 12.01(2)(a)-(d) or 12.02(2)(a)-(d) but which offers a service or services that could properly be offered by a recognised body. Rule 21 regulates the interface between the practice of a solicitor and the operation of a solicitor's separate business:

  • to ensure that members of the public are not confused or misled into believing that a business carried on by a solicitor,or REL or RFL is regulated by the Solicitors Regulation Authority or another approved regulator when it is not;

  • to ensure that the protections afforded to the clients of practising lawyers are in place in relation to certain mainstream legal services; and

  • to prevent a solicitor severing part of a case or matter in such a way that the client loses statutory protections.

The rule as it applies to your overseas practice is modified by 15.21.

Rule

21.01 General

  • (1)

    If you are practising from an office in England and Wales as a solicitor,or an REL, or as an RFLwho is a partner in an MNP, a director of a or recognised body,which is a company or a member of a recognised body which is an LLP, or if you are a manager or employee of a recognised body, or an employee of a recognised sole practitioner, you must comply with the provisions of this rule in relation to:

    • (a)

      services which may not be provided through a separate business;

    • (b)

      services which may be provided through a separate business or (subject to these rules) through a firm or in-house practice; and

    • (c)

      services which fall outside the scope of a solicitor's practice but which may be provided in conjunction with a firm or in-house practice.

  • (2)

    This rule applies to your involvement in any separate business whether the separate business is in England and Wales or outside the jurisdiction.

  • (3)

    This rule also applies to a recognised body in relation to an interest held in another body corporate which is not a recognised body.

  • (43)

    For the avoidance of doubt, in this rule "practising" includes practising as an in-house solicitor or an in-house REL.

21.02 Services which may not be provided through a separate business

  • (1)

    Subject to (2) below, you must not provide any of the following services through a separate business:

    • (a)

      the conduct of any matter which could come before a court, tribunal or inquiry, whether or not proceedings are started;

    • (b)

      advocacy before a court, tribunal or inquiry;

    • (c)

      instructing counsel in any part of the UK;

    • (d)

      immigration advice or immigration services;

    • (e)

      any activity in relation to conveyancing, applications for probate or letters of administration, or drawing trust deeds or court documents, which is reserved to solicitors and others under the Solicitors Act 1974;

    • (f)

      drafting wills;

    • (g)

      acting as nominee, trustee or executor in England and Wales;

    • (h)

      legal advice not included above; or

    • (i)

      drafting legal documents not included above.

Exceptions
  • (2)

    The provisions of (1) above do not apply to prohibit you from providing services through a separate business:

    • (a)

      which carries on your practice as a lawyer of another jurisdiction;

    • (b)

      which carries on your business as a trade mark agent, patent agent or European patent attorney;

    • (cb)

      which carries on your business as a parliamentary agent;

    • (dc)

      which is a wholly owned nominee company operated as a subsidiary but necessary part of the work of a separate business providing financial services; or

    • (ed)

      which provides legal advice and/or drafts legal documents within (1)(h) and/or (i) above, as a subsidiary but necessary part of some other service which is one of the main services of the separate business; or.

    • (f)

      which has no office in England and Wales, does not receive customers directly or indirectly referred from any firm through which you carry on your practice in England and Wales, or from any in-house practice you have in England and Wales, does not provide any services in relation to the UK; and does not provide executor, trustee or nominee services anywhere.

    However, you must comply with the requirements of 21.05 in relation to any such separate business.

21.03 Services which may be provided in conjunction with a firm or in-house practice

  • (1)

    The following services extend beyond, or fall outside, the scope of a solicitor's practice but you may provide such services in conjunction with a firm or in-house practice:

    • (a)

      practice as a qualified notary public;

    • (ba)

      educational and training activities; and

    • (cb)

      authorship, journalism orand publishing.

  • (2)

    SuchA services areprovided in conjunction with a firm or in-house practice of a solicitor, an REL, an MNP or a recognised body is not provided through a separate business for the purpose of this rule.

21.04 Services which may be provided (subject to these rules) either through a firm or in-house practice, or through a separate business

  • (1)

    You may provide the following services either (subject to these rules) through a firm or in-house practice, or through a separate business:

    • (a)

      alternative dispute resolution;

    • (b)

      financial services (except those that cannot form part of a solicitor's practice);

    • (c)

      estate agency;

    • (d)

      management consultancy;

    • (e)

      company secretarial services;

    • (f)

      acting as a parliamentary agent;

    • (g)

      acting as a trade mark agent, patent agent or European patent attorney;

    • (hg)

      practising as a lawyer of another jurisdiction;

    • (ih)

      acting as a bailiff;

    • (ji)

      acting as nominee, trustee or executor outside England and Wales; or

    • (kj)

      providing any other business, advisory or agency service which could be provided (subject to these rules) through a firm or in-house practice but is not included in 21.02.

  • (2)

    If you provide any service listed in (1) above through a separate business you must comply with 21.05.

21.05 Safeguards in relation to a separate business

  • (1)

    If you provide services through a separate business you must do nothing in the course of practice, or in the course of making referrals to the business or accepting referrals from the business, which would breach rule 1 (Core duties).

  • (2)

    You must ensure that the following safeguards are in place in relation to a separate business which offers or provides any of the services listed in 21.04(1):

    • (a)

      the separate business must not be held out or described in such a way as to suggest that the separate business is carrying on a practice regulated by the Solicitors Regulation Authority or another approved regulator, or that any lawyer connected with your firm is providing services through the separate business as a practising lawyer regulated by the Solicitors Regulation Authority or another approved regulator;

    • (b)

      all paperwork, documents, records or files relating to the separate business and its customers must be kept separate from those of any firm or in-house practice, even where a customer of the separate business is also a client of the firm or in-house practice;

    • (c)

      the client account or other account used to hold money for the clients of any firm or in-house practice must not be used to hold money for the separate business, or for customers of the separate business in their capacity as such;

    • (d)

      if the separate business shares premises, office accommodation or reception staff with any firm or in-house practice:

      • (i)

        the areas used by the firm or in-house practice must be clearly differentiated from the areas used by the separate business; and

      • (ii)

        all customers of the separate business must be informed that it is not regulated by the Solicitors Regulation Authority and that the statutory protections attaching to clients of a lawyer regulated by the Authority are not available to them as customers of that business;

    • (e)

      if you or your firm refer a client to the separate business, the client must first be informed of your interest in the separate business, that the separate business is not regulated by the Solicitors Regulation Authority, and that the statutory protections attaching to clients of a lawyer regulated by the Authority are not available to clientsthem as customers of the separate business; and

    • (f)

      if the separate business is an estate agency, then without prejudice to the provisions of these rules regarding conflicts of interests, neither you nor any firm through which you practise as a principal may act in the conveyance for the buyer of any property sold through the estate agency unless:

      • (i)

        the firm shares ownership of the estate agency with at least one other business in which neither you nor the firm have any financial interest;

      • (ii)

        neither you nor anyone else in the firm is dealing with or has dealt with the sale of the seller's property for the separate business; and

      • (iii)

        the buyer has given written consent to you or the firm acting, after your financial interest in the sale going through has been explained to the buyer.

Guidance to rule 21 – Separate businesses

  • 1.

    A separate business is a business which is not a firm (recognised body, recognised sole practitioner, authorised non-SRA firm or overseas law firm) or an in-house practice but which offers a service or services that could properly be offered by a firm or, subject to rule 13 (In-house practice), an in-house practice - for instance, title checks, searches, etc. for the provision of Home Information Packs.

  • 2.

    Providing a service through a separate business means having any active involvement in a separate business which provides that service – see the definitions of "separate business" and "providing a service through a "separate business" in rule 24 (Interpretation). You are not providing services through a separate business solely by virtue of being a non-executive director of, or having an insignificant shareholding in, a company which provides, for example, financial services.

  • 3.

    In England and Wales there is no legal impediment to a non-lawyer giving legal advice, drafting wills or administering estates, or running a business which provides such services. However, the client of a firm or an in-house practice has the protections afforded by these rules, the Solicitors Regulation Authority'sSRA's regulatory powers, the Compensation Fund and (if a firmrecognised body or recognised sole practitioner provides the service) indemnity insurance under the Authority'sSRA's compulsory indemnity scheme. The customers of a business which is not a firm or an in-house practice will not have the same protections.

  • 4.

    Rule 21 applies to you if you are a solicitor, REL or RFL practising from an office in England and Wales, or a recognised body, a manager of a recognised body, or an employee of a recognised body or recognised sole practitioner, practising in England and Wales. The rule does two things:

    • (a)

      it prohibits you, if you are practising in England and Wales as a solicitor or an REL, or as an RFL within the Solicitors Regulation Authority's regulation, from "hiving off" the kind of services a member of the public would expect you to provide as a lawyer regulated by the Authority, SRA or another approved regulator (i.e. core legal services) to a business which is not so regulated; and

    • (b)

      it requires you to institute safeguards in relation to other services which you are allowed to "hive off" (the kind of services a member of the public would not necessarily expect to be provided only by a lawyer regulated by the Solicitors Regulation AuthoritySRA but which are "solicitor-like" services).

    The above applies even if the separate business is overseas.

  • 5.

    The purposepurposes of the rule isare:

    • (a)

      to ensure that members of the public are not confused or misled into believing that a business is regulated by the Solicitors Regulation AuthoritySRA or another approved regulator when it is not;

    • (b)

      to ensure that the protections afforded to the clients of a practising lawyer or firm are in place in relation to core legal services; and

    • (c)

      to prevent a practising lawyer or firm severing part of a case or matter in such a way that the client loses statutory protections.

  • 4.6.

    If you are practising wholly outside England and Wales, the provisions of this rule do not apply to you but you must comply with 15.21(2) in relation to your involvement in any separate business.

  • 5.7.

    AsIf you are an in-house solicitor doing work permitted by rule 13 (In-house practice) you are not providing services through a separate business; but if, and you have a separate business in addition to your in-house practice you must comply with rule 21 or, if you are employed outside England and Wales, with 15.21(2).

Business as a professional not regulated by the Solicitors Regulation AuthoritySRA – 21.02(2)(a) and (b)

  • 6.8.

    Although you may not in general provide reserved litigation, advocacy, conveyancing and probate services, or immigration services,core legal services through a separate business, you may have a separate business as a parliamentary agent, trade mark agent, patent agent, European patent attorney, or as a lawyer of another jurisdiction. Such a business may undertake some of the activities listed in 21.02(1), butand21.02(2) states that you are not prohibited from having such a business. The safeguards for such a separate business as set out in 21.05are intended to make it clear that the business is governed by a different legal and regulatory regime from that governing services provided by solicitors.

  • 9.

    Note that a solicitor who was formerly an REL, when practising in the UK as a lawyer of an Establishment Directive profession, is subject to the rules of professional conduct and the SRA's regulatory procedures as if he or she were practising as a solicitor, and such a practice would not therefore be regarded as a separate business - see 15.01(2)(b)(v), 20.02(4) and 23.01(1)(e), and regulation 36 of the Establishment Directive Regulations.

Legal advice as a necessary and subsidiary part of another service

  • 7.10.

    The prohibitions on providing certain legal advice and drafting certainlegal documents through separate businesses do not apply when the advice or drafting is merely a necessary but subsidiary part of another service which you are allowed to provide through a separate business. An example would be a management consultancy business giving ancillary advice on obligations under the Data Protection Act 1998.

Executor, trustee and nominee companies

  • 8.11.

    You are not allowed to provide executor, trustee or nominee services in England and Wales through a separate business. An executor, trustee or nominee company operated in conjunction with the practice of a firm must be a recognised body, because:

    • (a)

      a company has a separate legal identity, so if a firm owns a company, and the company provides a service to the firm's clients, it is the company and not the firm that provides the service; and

    • (b)

      a company providing a service for clients of a firm will constitute a "business" for the purpose of rule 21, even if the company is dormant for Companies Acts purposes, and even if no charge is made to clients for its services.

  • 9.12.

    You are allowed to have a separate business which provides executor, trustee and nominee services outside England and Wales. If you do, you must put in place the safeguards required. You can, on the other hand, run an executor, trustee or nominee company which provides services only outside England and Wales as an overseas corporate firm within rule 12 (Framework of practice).

Companies providing company secretarial services

  • 13.

    Your firm may own a company whose purpose is to provide company secretarial services to clients of the firm. Such a company may either be operated as a legal practice (and must therefore be a recognised body), or it may be operated as a "separate business" (and must therefore be operated in compliance with rule 21 and may also need to be separately regulated by HMRC under the anti-money laundering legislation).

Service companies

  • 10.14.

    A service company operated for the purpose of providing services only to carry out administrative functions concerned with the running of the firm which wholly owns it, such as the employment of staff, the hiring of premises, furniture and equipment and general maintenance, is not a separate business, and does not require to be a recognised body because it is not regarded as practising.

  • 11.15.

    A company incorporated by an individual solicitor to provide that solicitor's services to a firm cannot be or in-house practice is not a separate business. If the circumstances of the individual and the company fulfil the requirements of paragraph (c)(iii) of the definition of an "employee" in rule 24, such a company will not be regarded as practising and so will not be required to become a recognised body.

Marketing and description of a separate business

  • 12.16.

    Under 21.05(2)(a) your separate business must not be held out or described in such a way as to suggest that the separate business is carrying on a practice regulated by the Solicitors Regulation AuthoritySRA or another approved regulator, or that any lawyer connected with your firm is providing services through the separate business as a practising lawyer regulated by the AuthoritySRA or another approved regulator. Unlike the more specific safeguards in 21.05(2)(b) to (f), this prohibition has a wide application and amounts to an absolute requirement to take all necessary steps to ensure that customers and third parties dealing with the separate business are not misled. However, it is not intended to prohibit you from running a separate business in association with your firm or mentioning your firm, or the fact that you are a lawyer, in connection with your separate business. The provision will have the following implications:

    • (a)

      You could not properly carry on your separate business under the same name as your firm, because that would create too strong a suggestion that the business, like the firm, is regulated by the Solicitors Regulation AuthoritySRA or other approved regulator. On the other hand, 21.05(2)21.05(2)(a) does not prohibit you from running your separate business in association with your firm, or using a similar or related name or "brand". However, in order to comply with 21.05(2)21.05(2)(a) you would need to differentiate properly the separate business from your firm and make it clear on the face of any notepaper or other publicity of the separate business using a similar or related name that the services of the separate business are not the services of practising lawyers.

    • (b)

      You could not properly market your separate business to potential customers on the basis that it is owned and run by practising solicitors and/or RELs, because that would create too strong a suggestion that the services of the separate business are provided by practising lawyers regulated by the Solicitors Regulation AuthoritySRA or other approved regulator. On the other hand, 21.05(2)21.05(2)(a) does not prohibit you from marketing your separate business on the basis that it is run and owned by persons who are qualified as lawyers – provided you make it clear that no lawyer involved in the separate business is practising as such through the separate business.

    • (c)

      SubruleRule21.05(2)21.05(2)(a) does not prohibit the use of the word "solicitor", "lawyer" or "attorney" in connection with your separate business. However, it would be a breach of 21.05(2)(a) if such a reference suggested that lawyers regulated by the Solicitors Regulation AuthoritySRA or other approved regulator practise through the separate business – so any such reference must be appropriately qualified so as to make it clear that the services of the separate business are not the services of practising lawyers. If the reference is in a letterhead or other publicity that statement should be in the same document.

Financial services

  • 13.17.

    Examples of financial services which cannot form part of a solicitor's practice (and which will not be covered by qualifying insurance under the Solicitors' Indemnity Insurance Rules) include banking, stockbroking and insurance underwriting.

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