SRA Handbook

Transitional provisions and grace period

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Rule 22: Transitional provisions and grace period

22.1

From 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, these rules shall have effect subject to the following amendments:

(a)

Rules 1.1(a), 2.1(a), 3.1(a), 8.7, 11.1(c)(i) and 12.1(a) shall be omitted;

(b)

In Rules 1.1(b) and 2.1(b) the words, "authorised as a sole practitioner" shall be substituted for the words "a recognised sole practitioner";

(c)

In Rules 1.2(a) and 2.2(a) the words "as a recognised body" shall be substituted for the words "a recognised sole practitioner";

(d)

In Rule 3.2(d) the words "a recognised sole practitioner," shall be omitted;

(e)

In Rules 5.1(d) and 5.2(c) the words "or by a recognised sole practitioner" shall be omitted;

(f)

In Rules 6.1 and 7.1 the words "or an employee of a recognised sole practitioner" shall be omitted;

(g)

In Rule 10.1(a) the word "recognised" shall be omitted and the words "by endorsing your practising certificate or certificate of registration to that effect" shall be omitted;

(h)

In Rules 10.1(b) and 10.2 the words "authorised as a" shall be substituted for the words "a recognised";

(i)

In Rule 12.1(b), the words "a lawyer manager" shall be substituted for the words "one of the lawyer managers"; and

(j)

Rule 13.1 shall have effect as if the words "sole practitioner," were inserted after the words "namely a".

22.2

Unless the context otherwise requires, references in these rules to:

(a)

these rules, or a provision of these rules; and

(b)

the SRA Code of Conduct, rules, regulations or regulatory arrangements, or a provision of the same,

include a reference to the equivalent rules, regulations or provisions previously in force.

22.3

A body that has, at the time these rules come into force, been recognised by the SRA under section 9 AJA and that does not comply with Rule 13.1(b) above shall continue to be treated as a legal services body for the purposes of these rules and the SRA's regulatory arrangements until:

(a)

such time as it ceases to comply with the management and control requirements set out in Rule 22.4 below; or

(b)

the end of the transitional period under Part 2 of Schedule 5 to the LSA, or such earlier time as the body may elect,

at which time it shall be a licensed body for the purposes of these rules and the SRA's regulatory arrangements.

22.4

The management and control requirements referred to in Rule 22.3 above are:

(a)

At least 75% of the body's managers must be:

(i)

individuals who are, and are entitled to practise as, lawyers of England and Wales, lawyers of Establishment Directive professions or RFLs; or

(ii)

bodies corporate which are legally qualified bodies;

although a legally qualified body cannot be a director of a body which is a company;

(b)

Individuals who are, and are entitled to practise as, lawyers of England and Wales, lawyers of Establishment Directive professions or RFLs must make up at least 75% of the ultimate beneficial ownership of the body; and

(c)

Individuals who are, and are entitled to practise as, lawyers of England and Wales, lawyers of Establishment Directive professions or RFLs, and/or legally qualified bodies, must:

(i)

exercise or control the exercise of at least 75% of the voting rights in the body; and

(ii)

if the body is a company with shares, hold (as registered members of the company) at least 75% of the shares.

(d)

Subject to Rule 13.1(b) above, every interest holder of the recognised body, and every person who exercises or controls the exercise of any voting rights in the body, must be:

(i)

an individual who is, and is entitled to practise as, a lawyer of England and Wales, a lawyer of an Establishment Directive profession or an RFL;

(ii)

a legally qualified body; or

(iii)

an individual who is approved under regulation 3 of the SRA Recognised Bodies Regulations 2009, regulation 5 of the SRA Recognised Bodies Regulations 2011 or Part 4 of the SRA Authorisation Rules and, subject to (e) below, is a manager of the body.

(e)

An individual who is not entitled under (d)(i) above may be an interest holder of a recognised body without being a manager of the body if:

(i)

the recognised body is a company which is wholly or partly owned by a partnership or LLP which is a legally qualified body;

(ii)

the individual is approved under regulation 3 of the SRA Recognised Bodies Regulations 2009, regulation 5 of the SRA Recognised Bodies Regulations 2011 or Part 4 of the SRA Authorisation Rules and is a manager of the partnership or LLP; and

(iii)

the individual is precluded under the partnership agreement or members' agreement from exercising or authorising any vote in relation to the company.

For the purposes of Rule 22.4 and for the purposes of section 9A(6)(h) and (6C) of the AJA "legally qualified body" means a body which would meet the services requirement in Rule 13.2 and is:

(A)

a recognised body;

(B)

an authorised non-SRA firm of which individuals who are, and are entitled to practise as, lawyers of England and Wales, lawyers of Establishment Directive professions or RFLs make up at least 75% of the ultimate beneficial ownership; or

(C)

a European corporate practice which is a lawyers' practice and is a body incorporated in an Establishment Directive state, or a partnership with separate legal identity formed under the law of an Establishment Directive state:

(I)

which has an office in an Establishment Directive state but does not have an office in England and Wales;

(II)

whose ultimate beneficial owners include at least one individual who is not a lawyer of England and Wales but is, and is entitled to practise as, a lawyer of an Establishment Directive profession;

(III)

whose managers include at least one such individual, or at least one body corporate whose managers include at least one such individual;

(IV)

75% of whose ultimate beneficial ownership is in the hands of individuals who are, and are entitled to practise as, lawyers of Establishment Directive professions, lawyers of England and Wales, and/or RFLs; and

(V)

75% of whose managers comprise such individuals, and/or bodies corporate 75% of whose managers comprise such individuals.

22.5

These rules shall not apply to licensable 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.

22.6

In these rules references:

(a)

in the preamble to the rules being made under section 83 and Schedule 11 to the Legal Services Act 2007;

(b)

to COLPs and COFAs; and

(c)

to the approval of managers, owners, COLPs and COFAs;

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.

22.7

Until the 180th day after the date on which the Society is designated as a licensing authority under Part 1 of Schedule 10 to the LSA:

(a)

[Deleted];

(b)

Rule 4.13 (insurers) shall have no effect;

(c)

Rule 13.06 (insurers) of the Solicitors' Code of Conduct 2007 shall continue to have effect; and

(d)

references to Rule 4.13 shall be treated as references to Rule 13.06 of the Solicitors' Code of Conduct 2007.