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The City has given a tentative thumbs-up to ’transformational’ proposals outlined by the Solicitors Regulation Authority (SRA) last week.
Speaking at The Lawyer’s sixth annual Strategic Risk Management Conference, Herbert Smith consultant and new SRA chair Charles Plant discussed a series
of proposals, promising ”modern regulation that treats solicitors as adults, not tying them up in red tape and bureaucracy”.
At its core is the introduction of outcome-focused regulation that promises to offer a more flexible approach for firms, as well as a new Solicitors’ Code of Conduct, which is set to be introduced on 6 October 2011.
“The key point is that firms and solicitors who respond positively will be able to enjoy a more constructive relationship with the SRA. They’ll experience lighter supervision,” said Plant. “Those firms that don’t can expect to be dealt with severely.”
Plant acknowledged that some recent criticisms, including those that appeared in last year’s Smedley review and Hunt report, were justified and that in
the past the organisation had been too focused on “prescriptive box-ticking”.
He also announced that the regulator has finally found space for its City base, taking on space near Cannon Street, which will house a City regulation group to develop relationships with firms in the corporate sector and strengthen ties with City firms.
Other priorities include merging the regulator’s two offices in Redditch and Leamington Spa, which house around 600 staff between them, into one location in the West Midlands; and within the next two to three years for the majority of the SRA board to be made up of lay professionals.
Sarah de Gay, head of compliance at Slaughter and May, was impressed with Plant’s presentation.
“I thought it was great - perfectly pitched,” she enthuses. “He showed real commitment to what he called the ’new relationship’, both with the City and everyone else the SRA regulates.
“He made allusions to openness and flexibility, and I like those references.”
Christopher Andrews, director of risk management at Simmons & Simmons, strikes a more cautious note. “I thought it was quite an interesting presentation,” he says. “I think the SRA’s got some bold plans, but the devil’s in the detail.
“Rewriting the code of conduct is going to mean a lot more work for law firms, although it will probably allow law firms greater flexibility, which is a good thing.
“The SRA has a lot of work to do in a short space of time. I think they’ll meet the deadlines, because they’ve set themselves up for a fall otherwise.”
Plant is eager for a two-way dialogue between the regulator and the City. He called on major commercial firms to get involved with consultations on the new code and outcome-focused regulation, draft versions of which will be unveiled in October 2010.
“I think there’ll be active involvement from the City,” Andrews adds. “The City of London Law Society [CLLS] is active and has had increasing involvement with the SRA, and I think other City firms will be involved too. Also, the SRA’s more active in seeking to consult the City.
“But it can be a double-edged sword - it’s nice to have an opportunity for consultation, but there’s been so many over the past few years. It’s nice to have your voice heard, but it can place a burden on firms.”
That sentiment is echoed by Jo Riddick, head of risk management at Macfarlanes. “If the consultation’s paper-based, we’ve already been inundated with that,” she says. “If it’s face-to-face it will be of more interest. But does the SRA have the resources to do that?”
Another City lawyer, who does not want to be named, believes the speech was “valuable and signals a new, constructive dialogue”, although he adds: “I’d expect that people will judge him [Plant] on delivery rather than on what he says; it’s still early days.”
Other areas discussed at the conference included market abuse and inside dealing, including the risks involved in legal outsourcing and limiting access to confidential information.
This was followed by a presentation from Norton Rose global general counsel Valerie Davies on the new Bribery and Corruption Bill, which aims to simplify and modernise the UK’s obscure and complex bribery laws.