Closed consultations

Looking to the future: phase two of our Handbook reforms

14 June 2018

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Looking to the Future: Phase two of our Handbook reforms

Our Handbook sets out the standards we expect solicitors and firms to meet and the rules they should follow. This summary explains the changes we will introduce following our phase two consultation on our Handbook changes.

What is our Looking to the Future programme?

We need to make sure we are keeping pace with a fast-changing legal services market so in 2014 we started our Looking to the Future reform programme. This is designed to make sure we are meeting the needs of the public in whose interest we work by regulating solicitors and law firms in the right way.

We want to make:

  • our rules focus on what matters – high professional standards
  • it easier for the public to access legal services
  • it easier for solicitors and firms to do business.

Our proposals

We split our proposed changes across four major consultations. We have consulted on:

What we have done: Phase one and two of our Handbook changes

Last year we confirmed our decisions on the first phase of changes to the Handbook including:

  • shorter, clearer Principles and Codes - including a separate code of conduct for solicitors and one for firms
  • simpler Accounts Rules, with a focus on keeping clients' money safe
  • removing a ban on solicitors working in businesses not regulated by us or another legal services regulator.

We then consulted on a second phase of changes to our other rules covering areas such as who can run firms, how we approve firms, and assess the suitability of those entering the profession. Our focus was again on making these rules simpler, easier to use, and focused on what matters.

The consultation also included our plans for the transitional arrangements for the Solicitors Qualifying Examination (SQE), and a revised enforcement strategy to provide more clarity about how and when we will, or will not, enforce.

Why is change needed: a focus on high professional standards

Setting and maintaining clear, high standards is fundamental to both good consumer protection and public confidence in solicitors and law firms. We are reforming the way solicitors qualify by introducing the SQE, which will make sure all solicitors meet consistent, high standards at the point of entry to the profession.

We also need to make sure that our Principles, Codes and rules set out clearly the high professional standards we expect of solicitors and firms. Our Handbook with its 30-page Code of Conduct and more than 400 pages of rules is long, complex and costly to apply.

Pages and pages of rules, which need regular updates, hinders rather than helps compliance. It creates cost and confusion rather than good practice and consumer protection.

Why change is needed: helping more people access legal services

Our proposals aim to also address the problem that too many people and small businesses struggle to access legal services. Only one in ten people use a solicitor or barrister when they have a legal problem.

Some of our current rules are unnecessary bureaucracy that push up firms' running costs with little or no benefit in terms of consumer protection.

Some of our rules also restrict how and where solicitors can work. They make it difficult for law firms to work in different ways to respond to the needs of the public, or for solicitors to work in businesses outside law firms. This could contribute to the problem that many people do not benefit from the high standards and expertise solicitors offer.

Extensive feedback on our proposals

In reviewing our Handbook we have spoken to more than 14,000 individuals, firms and other organisations. This includes consumer groups, members of the public and solicitors. We had 77 responses to our phase two consultation.

There continues to be widespread support for our plans to remove unnecessary bureaucracy and make the Handbook simpler and easier to use. Respondents were also overwhelmingly in favour of our updated approach to enforcement.

Yet there were areas that were more contentious, such as our plans to allow freelance solicitors, and the removal of a rule that restricts solicitors from practising alone until they have been qualified for three years. We have listened and responded by making changes to our proposals.

Our key decisions and how we have responded to feedback

Areas where we have decided to continue with our planned approach include:

Allowing solicitors to work in different ways

  • We will allow solicitors to provide 'reserved legal activities' 1, in certain circumstances, on a freelance basis to the public. Freelancers would not be able to hold client money or employ people. They would need adequate and appropriate indemnity insurance and to comply with our Code of conduct.
  • In phase one we also made the decision to allow solicitors to provide non-reserved activities, such as general legal or employment advice, beyond a law firm. This means they could work in a business that is not regulated by the SRA or other legal services regulator. The solicitor would have to comply with our Code of Conduct and cannot hold client money but would not require professional indemnity insurance.
  • In both situations, solicitors would need to be clear with prospective clients about their regulatory position, including what insurance arrangement they have in place.

Allowing traditional law firms to have a UK practising address

  • Currently all law firms need to have a practising address in England and Wales.
  • By allowing traditional law firms in Scotland or Northern Ireland to offer 'reserved legal services' to people in England and Wales, we could potentially increase consumer choice.

Transitional arrangements for the SQE

  • The SQE, is set to be introduced, at the earliest, in 2020. All those starting the qualification process from then onwards must take the SQE.
  • We want to make sure those who have already started to work towards qualification through the existing routes have a fair opportunity to complete. They will have 11 years after the SQE is introduced to qualify this way.
  • Responding to feedback, we have decided to extend the transition period for Qualified Lawyers Transfer Scheme candidates. They will have an extra 12 months to complete their assessments and apply for admission after the SQE is introduced.

Updated enforcement approach and guidance

  • Following broad support, our enforcement approach will provide greater clarity for the public and profession and help us focus on the most serious matters.
  • We will make sure through guidance that our approach to health and welfare issues of solicitors involved in our procedures is clear.

In other areas we have responded to feedback by changing our approach. These include:

Checks to make sure those running firms have appropriate experience

  • The responses to our consultation confirmed that our current existing 'qualified to supervise' rule is confusing.
  • We were persuaded by feedback that – in addition to the other protections in place - there should still be a specific rule in this area.
  • We will introduce a new rule that any firm we regulate will need at least one manager or employee with three-year's experience. That individual will be responsible for supervising the work carried out.

Checks to make sure freelancers have appropriate experience and protections

  • We will extend this three-year rule to solicitors who want to work as a freelancer.
  • We have also broadened our requirements, so that freelancers will need adequate and appropriate professional indemnity insurance for all their legal work, not just 'reserved activities'. This will be clearer for their clients.

Retaining early character and suitability tests

  • There was support for a clearer yet less rigid approach, allowing us to better consider an individual's circumstances.
  • We have also responded to feedback by agreeing to continue to provide an early check on character and suitability for aspiring solicitors. This is so they can understand at an early stage the potential consequences of issues for their admission.

Changes to how we regulate overseas practices

  • We have made some further, technical changes to remove rules on overseas practice, in particular where local rules or regulatory systems are better placed to deal with issues.
  • We have made sure our rules focus on issues of personal conduct or systemic failures that relate to public confidence in the profession and in the English and Welsh legal jurisdiction.

In addition to changes to our phase two proposals, we have also made some changes to our phase one proposals. For instance, we have now split in two the principle that solicitors must "act with honesty and with integrity", so it is clear that matters of honesty and integrity can be separate issues.

Next steps

  • We have now published the final set of rules that will make up our new regulatory approach. These rules are being submitted to the Legal Services Board (LSB) for approval this summer
  • Subject to the LSB's approval, we anticipate implementing these changes in April 2019.
  • We will not be able to confirm exact timing for implementation until the LSB decision. Yet we recognise that solicitors and firms will need time to prepare for these new rules.
  • With this in mind we will work closely with the profession to help them understand the changes which may require solicitors and firms to do things differently, as well as highlighting opportunities for them to work in different ways.

As part of our wider 'Looking to the Future' reform programme, we have also published our decisions around our 'Better information, more choice' consultation. This will also need approval from the LSB.


1. There are six specific 'reserved legal activities', such as completing a house sale or carrying out litigation, that can only be provided by those who are approved to do so. At the moment, these activities can only be carried out by a regulated individual, such as a solicitor or barrister, working in a law firm approved by a legal regulator. 'Non-reserved activities' include family, employment or personal injury work, as well as legal advice.

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