SRA chair in hot seat at Lawyer event as City firms scrutinise regulatory shift
15 March 2010 | By Andrew Pugh
The new chair of the Solicitors Regulation Authority (SRA) board will today (15 March) set out the objectives of the new-look regulatory body in a speech at The Lawyer’s sixth annual Strategic Risk Management Conference.
Former Herbert Smith litigation partner Charles Plant was named as chair of the SRA board in August and took up the position at the beginning of this year.
He faces the difficult task of ensuring that the SRA heals rifts between the regulator and leading City firms in what is becoming an increasingly tense relationship.
Both the Smedley review and the Hunt report (see box) were highly critical of the watchdog, concluding that it did not reflect adequately the interests of large City firms.
Today’s keynote speech will be monitored closely by the City. Bird & Bird risk management partner Roger Butterworth sums up the feeling of many in City when he says: “There’ll be a lot of interest in Charles Plant’s speech. The City eagerly anticipates what he has to say”.
“I hope any changes to the regulations will engender greater understanding of firms such as ours,” says Michael Walkington, head of law and compliance at Linklaters. “There needs to be an understanding that sophisticated corporate clients don’t need to be told how to suck eggs and be walked through every stage of client engagement in the legal process.
“It’s a completely different situation and there needs to be more understanding of those relationships.”
Walkington will take part in a panel discussion at the conference focusing on SRA audits and how the authority regulates large global firms compared with smaller outfits.
Walkington speaks from experience, having been closely involved in the SRA’s audit of Linklaters last year.
“I’m particularly interested in possible changes to regulation,” he says, “and what impact that will have on the style of the visits.”
Chris Perrin, executive partner and general counsel at Clifford Chance, says: “The findings of the Smedley review need to be implemented.”
Sarah De Gay, head of compliance at Slaughter and May, says: “It’ll be quite interesting to see what he [Plant] says. Everyone wants a regulatory body that understands them, and that’s what the Smedley review was all about. There’s a need for City expertise, but how that manifests itself I don’t know.”
While the Legal Services Act 2007 triggered a shift in the regulatory landscape, another major impact was in the form of alternative business structures (ABSs), which will be addressed at the conference by Fran Gillon, director of regulatory practice at the Legal Services Board (LSB).
Gillon will discuss the LSB’s role in developing ABSs, which could lead to an overhaul of law firms’ business models by allowing non-lawyers to own law firms, and pave the way
for the emergence of multidisciplinary firms.
It is also likely to lead to mergers and some law firms moving from the traditional partnership model to corporations. It also raises the possibility of firms listing on stock exchanges.
Other areas being discussed at the conference include data protection compliance, anti-money laundering, the impact of the Bribery and Corruption Bill, liability caps and professional indemnity.
Speakers include Linklaters risk lawyer Dyann Heward-Mills and Freshfields head of anti-money laundering Suzie Ogilvie.
“How firms comply with data protection issues and the risks involved are major issues facing firms and can give rise to numerous difficulties,” says Heward-Mills. “We [Linklaters] are among the market leaders in that respect and we’re dedicated to knowing that the team complies globally.”
Ogilvie will give a presentation on ways in which the Treasury is seeking to tackle money laundering and a recent House of Lords EU committee report into the issue. She will also discuss the serious implications of Shah v HSBC (2009) for banks in complying with money laundering regulations.
It is, however, the keynote speech by Plant that has garnered the most interest.
SRA under fire
The SRA has been mired in criticism over the past year, leading to accusations that it is no longer fit for purpose.
Last March the Smedley review called for an overhaul of the SRA to better reflect the firms it regulates, arguing that large City firms felt they were being sidelined in favour of high-street firms.
Its findings were later supported by the Hunt report, published in October, which favoured self-regulation for firms with corporate clients, an option favoured by the City of London Law Society (CLLS), which has also been critical of the SRA.
The SRA has made several moves in response to the criticisms, appointing a new-look board featuring a number of high-profile City lawyers and announcing plans to open a London office.
But in February the Master of the Rolls Lord Neuberger branded current regulatory measures a “maze” and called for the regulatory process to be simplified.
Neuberger echoed the concerns of many in the profession when he expressed his concern that even more regulatory boards would soon be created as a result of the Legal Services Act 2007, leading to a duplication of activities and pushing up the cost of maintaining the various watchdogs.