SRA bristles as Law Society puts new chairman in place

The recent appointment of Charles Plant – a former Herbert Smith litigation partner and member of the Legal ­Services Consultative Panel – as the next chair of the Solicitors Regulation Authority (SRA) (, 22 June) will pique the interest of many – apparently including those at the SRA.

“Oh yes, we hear we have a new chair!” exclaimed one SRA source. “Don’t know much about him, everything we learnt was in a magazine called The Lawyer and what we picked up from Google.”

These comments may be slightly tongue-in-cheek, but they are not ­necessarily a million miles from the ­overriding sentiment at the regulator.
As The Lawyer reported (15 June 2009) the SRA has not had any involvement in the selection of its own board or chair. In a recent interview with The Lawyer, SRA chief executive Antony Townsend decried the situation.

“It would clearly have been much ­better had the appointments process been run by the SRA,” he said. “The Law Society should have an involvement on behalf of the profession, but not dominate the process. Given that the SRA board has been responsible for regulation for the past four years, it is very odd that it has no involvement.”

Divergences over the appointment process are just one aspect of the lengthy political wranglings between the bodies, which extend from the procedural to the substantive. For example, when The Law Society decided that an inquiry was ­needed into whether City firms require their own regulator, it only told the SRA – whose role would be substantially affected by any such changes – one day before going public with the announcement (10 October 2008). This generated ill-feeling, with the SRA issuing a ­statement referring to the Law Society appearing to be “confusing representative and regulatory functions”.

Eight months down the line and the SRA is in the process of deliberating over an official response to the resulting Smedley report, which recommends that a ‘City work regulator’ division be ­established within the SRA. One SRA source concedes that City firms have ­differing regulatory requirements from their high-street counterparts, but thinks that during a recession this can be best ­managed through ‘upskilling’ ­existing employees, rather than
by creating ­additional expensive ­bureaucracy.

But Chris Perrin, executive partner and general counsel at Clifford Chance, believes that any resulting cost will just have to be absorbed. “Smedley says the large City firms aren’t being adequately regulated. If it’s going to cost a bit more that money has to be found. If the SRA isn’t going to follow Smedley pretty closely, we’ll have to look at a separate regulator.”

Given that the SRA’s overall budget is determined by the Law Society this is a moot point, but Russell Wallman, director of government relations at the Law Society, thinks this is inevitable. “There’s probably no regulator that can just decide for itself how much money it has,” he says. “I don’t think there’s ever a bad time to make sure you’ve got the skills and the approach [needed]. The problem is that the SRA doesn’t have enough people with understanding of the work corporate firms do.”

In the meantime the Legal Services Board (LSB) did hint last week at possible changes in financial arrangements from next year.

“The LSB is currently consulting on proposals for rules to ensure ­regulatory independence. If adopted, these would see mechanisms – among a range of other internal governance measures – to control the management of all shared services other than staff line management, such as accommodation, HR, finance and IT, which should be demonstrably independent of the day-to-day control of the representative function. Our consultation closes on 26 June after which we will review responses and issue final rules for ­adoption from 1 January 2010.”

It may be that, come 2010, the LSB takes an active and unequivocal role on this and other subjects dividing the two bodies. Clearer guidance on the delineation between these two bodies is necessary not only to stop the persistent squabbling, but more importantly to shore up public confidence in the profession.