SRA Handbook

General provisions and interpretation

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Version 1 of the Handbook was published on 16/09/2011. For more information, please click 'History' Above

Part 1: General provisions and interpretation

Rule 1: Authority

1.1

These Rules are made on 17 June 2011 by the Solicitors Regulation Authority Board under sections 37, 79 and 80 of the Solicitors Act 1974, section 9 of the Administration of Justice Act 1985, and paragraph 19 of Schedule 11 to the Legal Services Act 2007, with the approval of the Legal Services Board under paragraph 19 of Schedule 4 to the Legal Services Act 2007.

1.2

These Rules regulate indemnity provision in respect of the practices of solicitors, recognised bodies, RELs, RFLs, and licensed bodies in respect of their regulated activities and certain other European lawyers, carried on wholly or in part in England and Wales.

Rule 2: Citation

2.1

These Rules may be cited as the SRA Indemnity Rules 2011.

Rule 3: Definitions and interpretation

3.1

For the purposes of these Rules:

AJA

means the Administration of Justice Act 1985;

approved regulator

means any body listed as an approved regulator in paragraph 1 of Schedule 4 to the LSA or designated as an approved regulator by an order under paragraph 17 of that Schedule;

contributions

means contributions previously made to the fund in accordance with Part III of the Solicitors' Indemnity Rules 2007 (or any earlier corresponding provisions), and any additional sums paid in accordance with Rule 16 of these Rules;

Council

has the meaning given in section 87 of the SA;

eligible former principal

means a principal of a previous practice where:

(i)

that previous practice ceased on or before 31 August 2000; and

(ii)

a relevant claim is made in respect of any matter which would have given rise to an entitlement of the principal to indemnity out of the fund under the Solicitors' Indemnity Rules 1999 had the claim been notified to Solicitors Indemnity Fund Limited on 31 August 2000; and

(iii)

the principal has not at any time been a "principal" of the relevant successor practice ("principal" having the meaning applicable to the SIIR); and

(iv)

at the time that the relevant claim is made the principal is not a "principal" in "private practice" ("principal" and "private practice" having the meanings applicable to the SIIR);

Establishment Directive

means the Establishment of Lawyers Directive 98/5/EC;

expired run-off claim

means any claim made against the fund for indemnity under these Rules in respect of which no preceding qualifying insurance remains in force to cover such claim, by reason only of:

(i)

the run-off cover provided or required to be provided under the policy having been activated; and

(ii)

the sixth anniversary of the date on which cover under such qualifying insurance would have ended but for the activation of such run-off cover having passed; or

(iii)

(in the case of a firm in default or a run-off firm) the period of run-off cover provided or required to be provided under arrangements made to cover such claim through the ARP having expired;

expired run-off cover

means either:

(i)

(unless (ii) below applies) the terms of the ARP policy in force at the time immediately prior to the date on which run-off cover was triggered under the preceding qualifying insurance, excluding clause 5 (Run-off cover) of the MTC, as if it were a contract between Solicitors Indemnity Fund Limited and the firm or person making an expired run-off claim; or

(ii)

where they are provided to Solicitors Indemnity Fund Limited prior to payment of the claim, the terms of the preceding qualifying insurance, provided that:

(A)

references in the preceding qualifying insurance to the qualifying insurer that issued such insurance shall be read as references to Solicitors Indemnity Fund Limited;

(B)

any obligation owed by any insured under the preceding qualifying insurance to the qualifying insurer which issued such insurance shall be deemed to be owed to Solicitors Indemnity Fund Limited in place of such qualifying insurer, unless and to the extent that Solicitors Indemnity Fund Limited in its absolute discretion otherwise agrees;

(C)

the obligations of the fund and/or any insured in respect of an expired run-off claim shall neither exceed nor be less than the requirements of the MTC which, in accordance with the applicable SIIR, such preceding qualifying insurance included or was required to include.

Solicitors Indemnity Fund Limited shall be under no obligation to take any steps to obtain the terms of any such preceding qualifying insurance, which for these purposes includes the terms on which it was written in respect of the insured firm or person in question, and not merely a standard policy wording.

foreign lawyer

means an individual who is not a solicitor or barrister of England and Wales, but who is a member, and entitled to practise as such, of a legal profession regulated within a jurisdiction outside England and Wales;

fund

means the fund maintained in accordance with these Rules;

indemnity period

means the period of one year commencing on 1 September in any calendar year from 1987 to 2002 inclusive, the period of 13 calendar months commencing on 1 September 2003, and the period of one year commencing on 1 October in any subsequent calendar year;

legal activity

has the meaning given in section 12 of the LSA and includes any reserved legal activity and any other activity which consists of the provision of legal advice or assistance, or representation in connection with the application of the law or resolution of legal disputes;

licensed body

means a body licensed by the SRA under Part 5 of the LSA;

licensing authority

means an approved regulator which is designated as a licensing authority under Part 1 of Schedule 10 to the LSA, and whose licensing rules have been approved for the purposes of the LSA;

LLP

means a limited liability partnership incorporated under the Limited Liability Partnerships Act 2000;

LSA

means the Legal Services Act 2007;

master policy

means a policy referred to in Rule 5;

master policy insurer

means an insurer under a master policy;

member

means a member of a practice being:

(i)

any principal (including any principal) therein;

(ii)

any director or officer thereof, in the case of a recognised body or a licensed body which is a company;

(iii)

any member thereof in the case of a recognised body or a licensed body which is an LLP;

(iv)

any recognised body or a licensed body which is a partner or held out to be a partner therein and any officer of such recognised body or a licensed body which is a company, or any member of such recognised body or a licensed body which is an LLP;

(v)

any person employed in connection therewith (including any trainee solicitor);

(vi)

any solicitor or REL who is a consultant to or associate in the practice;

(vii)

any foreign lawyer who is not an REL and who is a consultant or associate in the practice; and

(viii)

any solicitor or foreign lawyer who is working in the practice as an agent or locum tenens, whether he or she is so working under a contract of service or contract for services;

and includes the estate and/or personal representative(s) of any such persons;

non-registered European lawyer

means a member of a legal profession which is covered by the Establishment Directive, but who is not:

(i)

a solicitor, REL or RFL,

(ii)

a barrister of England and Wales, Northern Ireland or the Irish Republic, or

(iii)

a Scottish advocate;

overseas

means outside England and Wales;

overseas practice

means a practice carried on wholly from an overseas office or offices, including a practice deemed to be a separate practice by virtue of paragraph (ii) of the definition of separate practice;

panel solicitors

means any solicitors appointed by the Solicitors Indemnity Fund in accordance with clause 14.15 of these Rules;

partner

means a person who is or is held out as a partner in a partnership;

partnership

means an unincorporated body in which persons are or are held out as partners and does not include a body incorporated as an LLP;

person

means an individual or a body of persons (corporate or unincorporated);

practice

means a practice to the extent that:

(i)

in relation to a licensed body, it carries on regulated activities; and

(ii)

in all other cases, it carries on private practice providing professional services as a sole solicitor or REL or as a partnership of a type referred to in Rule 6.1(d) to 6.1(f) and consisting of or including one or more solicitors and/or RELs, and shall include the business or practice carried on by a recognised body in the providing of professional services such as are provided by individuals practising in private practice as solicitors and/or RELs or by such individuals in partnership with RFLs, whether such practice is carried on by the recognised body alone or in partnership with one or more solicitors, RELs and/or other recognised bodies;

preceding qualifying insurance

means, in the case of any firm or person who makes an expired run-off claim, the policy of qualifying insurance which previously provided run-off cover in respect of that firm or person, or which was required to provide such cover, or (in the case of a firm in default or a run-off firm) arrangements to provide such run-off cover through the ARP;

previous practice

means any practice which shall have ceased to exist as such (for whatever reason, including by reason of (i) any death, retirement or addition of principals or (ii) any split or cession of the whole or part of its practice to another without any change of principals);

principal

means:

(i)

a solicitor who is a partner or a sole solicitor within the meaning of section 87 of the SA, or an REL who is a partner, a recognised body or who on or before 31 March 2012 or the date on which an order made pursuant to section 69 of the LSA relating to the status of sole practitioners comes into force, whichever is the later, was a sole practitioner, or a RFL or non-registered European lawyer who is a partner, and includes any solicitor, REL, RFL or non-registered European lawyer held out as a principal; and

(ii)

additionally in relation to a practice carried on by a recognised body or a licensed body alone, or a practice in which a recognised body or a licensed body is or is held out to be a partner:

(A)

a solicitor, REL, RFL or non-registered European lawyer (and in the case of a licensed body any other person) who:

(I)

beneficially owns the whole or any part of a share in such recognised body or licensed body (in each case, where it is a company with a share capital); or

(II)

is a member of such recognised body or licensed body (in each case, where it is a company without a share capital or an LLP or a partnership with legal personality); or

(B)

a solicitor, REL, RFL or non-registered European lawyer (and in the case of a licensed body any other person) who is:

(I)

the ultimate beneficial owner of the whole or any part of a share in such recognised body or licensed body (in each case, where the recognised body or licensed body is a company with a share capital); or

(II)

the ultimate owner of a member or any part of a member of such recognised body or licensed body (in each case, where the recognised body or licensed body is a company without a share capital or an LLP or a partnership with legal personality);

private practice

shall be deemed to include:

(i)

the acceptance and performance of obligations as trustees;

(ii)

notarial practice where a solicitor notary operates such notarial practice in conjunction with a solicitor's practice, whether or not the notarial fees accrue to the benefit of the solicitor's practice;

but does not include:

(iii)

practice to the extent that any fees or other income accruing do not accrue to the benefit of the practice carrying on such practice (except as provided by paragraph (b) in this definition);

(iv)

practice by a solicitor or REL in the course of his or her employment with an employer other than a solicitor, REL, recognised body, licensed body or partnership such as is referred to in Rule 6.1(d) to 6.1(f); in which connection and for the avoidance of doubt:

(A)

any such solicitor or REL does not carry on private practice when he or she acts in the course of his or her employment for persons other than his or her employer;

(B)

any such solicitor or REL does not carry on private practice merely because he or she uses in the course of his or her employment a style of stationery or description which appears to hold him or her out as a principal or solicitor or foreign lawyer in private practice;

(C)

any practice carried on by such a solicitor outside the course of his or her employment will constitute private practice;

(v)

discharging the functions of the following offices:

(A)

judicial office;

(B)

Under Sheriffs;

(C)

members and clerks of such tribunals, committees, panels and boards as the Council may from time to time designate but including those subject to the Tribunals and Inquiries Act 1992, the Competition Commission, Legal Services Commission Review Panels and Parole Boards;

(D)

Justices' Clerks;

(E)

Superintendent Registrars and Deputy Superintendent Registrars of Births, Marriages and Deaths and Registrars of Local Crematoria;

(F)

such other offices as the Council may from time to time designate;

recognised body

means a body recognised by the SRA under section 9 of the AJA;

regulated activity

means:

(i)

any reserved legal activity;

(ii)

any other legal activity; and

(iii)

any other activity in respect of which a licensed body is regulated pursuant to Part 5 of LSA;

regulated person

has the meaning given in section 21 of the LSA;

REL

means registered European lawyer, namely an individual registered with the SRA under regulation 17 of the European Communities (Lawyer's Practice) Regulations 2000 (SI 2000 no. 1119);

relevant claim

means a claim made on or after 1 September 2000 against a relevant successor practice;

relevant indemnity period

in relation to contributions or indemnity means that indemnity period in respect of which such contributions are payable or such indemnity is to be provided in accordance with these Rules;

relevant successor practice

means in respect of a previous practice, a successor practice or a "successor practice" (as defined in Appendix 1 to the SIIR) (as may be applicable) against which a relevant claim is made;

reserved legal activity

has the meaning given in section 12 of the LSA, and includes the exercise of a right of audience, the conduct of litigation, reserved instrument activities, probate activities, notarial activities and the administration of oaths, as defined in Schedule 2 to the LSA;

RFL

means registered foreign lawyer, namely, an individual registered with the SRA under section 89 of the Courts and Legal Services Act 1990;

SA

means the Solicitors Act 1974;

separate practice

means:

(i)

a practice in which the number and identity of the principals is not the same as the number and identity of the principals in any other practice. When the same principals in number and identity carry on practice under more than one name or style, there is only one practice;

(ii)

in the case of a practice of which more than 25% of the principals are foreign lawyers, any overseas offices shall be deemed to form a separate practice from the offices in England and Wales;

(iii)

in the case of an overseas office of a practice, the fact that a principal or a limited number of principals represent all the principals in the practice on a local basis shall not of itself cause that overseas office to be a separate practice provided that any fee or other income arising out of that office accrues to the benefit of the practice; and

(iv)

in the case of a recognised body or licensed body the fact that all of the shares in the recognised body or licensed body (as the case may be) are beneficially owned by only some of the principals in another practice, shall not, of itself, cause such a recognised body or licensed body (as the case may be) to be a separate practice provided that any fee or other income arising out of the recognised body or licensed body accrues to the benefit of that other practice;

SIIR

means the Solicitors' Indemnity Insurance Rules 2000 to 2010 or SRA Indemnity Insurance Rules or any rules subsequent thereto;

Society

means the Law Society, in accordance with section 87 of the SA;

solicitor

means a person who has been admitted as a solicitor of the Senior Courts of England and Wales and whose name is on the roll kept by the Society under section 6 of the SA;

SRA

means the Solicitors Regulation Authority, and reference to the SRA as an approved regulator or licensing authority means the SRA carrying out regulatory functions assigned to the Society as an approved regulator or licensing authority;

SRA Authorisation Rules

means the SRA Authorisation Rules for Legal Services Bodies and Licensable Bodies 2011;

SRA Indemnity Insurance Rules

means the SRA Indemnity Insurance Rules 2011.

3.2

"ARP policy", "ARP", "claim", "circumstances", "firm in default", "insured", "insured firm", "MTC", "qualifying insurance" and "run-off firm" each have the meaning respectively given to such expressions in the SIIR in force at the time immediately prior to the date on which run-off cover was triggered under the preceding qualifying insurance.

3.3

In these Rules, unless the context otherwise requires:

(a)

the singular includes the plural, and vice versa;

(b)

a reference to a Rule is to a Rule forming part of these Rules, except in relation to Schedule 1 where a reference to a rule is to a rule in the Solicitors' Indemnity Rules 1999;

(c)

a reference to any statute, statutory provision, or regulation includes:

(i)

any subordinate legislation (as defined by section 21(1) of the Interpretation Act 1978) made under it; and

(ii)

any provision which it has superseded or re-enacted (with or without modification) or amended, and any provision superseding it or re-enacting it (with or without modification) or amending it either before, or at the date of the commencement of these Rules, or after the date of the commencement of these Rules;

(d)

headings are for ease of reference only and shall not affect the interpretation of these Rules;

(e)

the Schedule to these Rules forms part of these Rules; and

(f)

the terms in italics will have the meaning set out in Rule 3.1 and 3.2.

3.4

These Rules will be governed by and interpreted in accordance with English law.

3.5

These Rules shall not apply to licensed bodies until such time as the Society is designated as a licensing authority under Part 1 of Schedule 10 to the LSA and all definitions shall be construed accordingly.

3.6

References to these Rules being made under paragraph 19 of Schedule 11 to the Legal Services Act 2007 shall have no effect until such time as the Society is designated as a licensing authority under Part 1 of Schedule 10 to the LSA.

Rule 4: Establishment and maintenance of fund

4.1

The Society shall maintain the fund in accordance with these Rules.

4.2

The purpose of the fund is to provide indemnity against loss as mentioned in section 37 of the SA as extended by section 9 of the AJA, Schedule 4 paragraph 1(3) of the European Communities (Lawyer's Practice) Regulations 2000 and section 89 of the Courts and Legal Services Act 1990 in the circumstances, to the extent and subject to the conditions and exclusions specified by the Solicitors' Indemnity Rules 1987 as the same have been and are in force and amended and applied from time to time and by any future Rules continuing, amending, adding to, applying or re-enacting such or other Rules to provide such indemnity in respect of annual indemnity periods (starting in 1987) unless and until otherwise determined by future Rules.

4.3

The fund shall be maintained by contributions previously made by or on behalf of solicitors, recognised bodies, RELs and RFLs in respect of each indemnity period in accordance with Part III of the Solicitors' Indemnity Rules 2007 (or any earlier corresponding provisions), and by any additional contributions in accordance with Rule 16.

4.4

The Society may maintain the fund as a single continuous fund, and any deficiency in respect of one indemnity period may be met in whole or part from contributions in respect of another indemnity period or indemnity periods and any balance in respect of one indemnity period may be applied to the benefit of any other indemnity period or indemnity periods.

4.5

The fund shall be held, managed and administered in accordance with Part IV of these Rules by Solicitors Indemnity Fund Limited, a company set up by the Society for this purpose, or by such other person or persons (including the Society itself) as the Society may designate for such purpose, in place of Solicitors Indemnity Fund Limited. References in these Rules to Solicitors Indemnity Fund Limited shall include any such other person or persons.

Rule 5: Indemnity Periods before 1 September 1987

5.1

The policies taken out and maintained and the certificates issued by the Society pursuant to the Solicitors' Indemnity Rules 1975 to 1986 shall continue to provide cover subject to and in accordance with their terms in respect of their respective periods up to and including 31 August 1987. They shall not provide cover in respect of any subsequent period.

Rule 6: Application of the Rules

6.1

These Rules shall apply to a practice carried on by:

(a)

a sole solicitor;

(b)

an REL practising on or before 31 March 2012 or the date on which an order made pursuant to section 69 of the LSA relating to the status of sole practitioners comes into force, whichever is the later, as a sole practitioner;

(c)

a recognised body;

(d)

a partnership consisting of one or more solicitors and/or RELs and/or recognised bodies and/or licensed bodies;

(e)

a partnership consisting of one or more solicitors and/or RELs, together with one or more RFLs;

(f)

a partnership consisting of one or more RELs with or without one or more RFLs, together with one or more non-registered European lawyers practising from one or more offices in any state to which the Establishment Directive applies, but outside England and Wales; and

(g)

a licensed body in respect of its regulated activities.

Rule 7: Scope of indemnity

7.1

The following persons, namely:

(a)

solicitors, former solicitors, RELs, persons formerly practising as RELs, RFLs practising in partnership with solicitors or RELs, persons formerly practising as RFLs in partnership with solicitors or RELs, non-registered European lawyers practising in partnership with RELs, and persons formerly practising as non-registered European lawyers in partnership with RELs;

(b)

employees and former employees of the above;

(c)

recognised bodies and former recognised bodies;

(d)

officers and employees and former officers and employees of recognised bodies and former recognised bodies;

(e)

licensed bodies and former licensed bodies in respect of their regulated activities; and

(f)

regulated persons, including officers and employees and former officers and employees of licensed bodies,

shall be provided with indemnity out of the fund against loss arising from claims in respect of civil liability incurred in private practice in their aforesaid capacities or former capacities in the manner set out in Rule 10 and in the circumstances, to the extent and subject to the conditions and exclusions set out in Part II of these Rules and not otherwise.