Solicitors can work without professional indemnity insurance and freelance solicitors can work in unregulated practices – what’s new?

Are Dodgy Geezers the Future for the Legal Profession? Apologies to the model above who presumably is not dodgy at all!

The SRA have today announced that freelance solicitors can work directly with the public provided they have the appropriate indemnity insurance, and solicitors can work in unregulated companies. It seems that the work solicitors do in unregulated companies has to be non-regulated work, i.e. work the solicitor does not specifically need to do. It is not clear exactly what freelance solicitors working directly with the public are allowed to do and not do, but it seems that they are allowed to do regulated activity as well as unregulated activity, provided they have the appropriate indemnity insurance in place.

It is not yet clear exactly what level of protection the public will have from either group of solicitors, whether it’s those working in unregulated companies or freelance solicitors working directly on behalf of the public, but the SRA seem to have managed to create an almighty mess of the current regulated system of providing legal services.

But what’s new?

Firstly, freelance solicitors have been able to work directly with the public as locum solicitors since the year dot, because the vast majority of solicitors firms have professional indemnity insurance in place that enables the locum to work for them through their own professional indemnity insurance, and not actually have to have their own professional indemnity insurance to act for clients, provided they are doing this via solicitors firms.

The difference will be in the way freelance solicitors are now able to give advice directly to the public in the same way that direct access barristers can, namely they have their own offices rather than needing to set up as a solicitors firm. The only requirement will be that they have their own professional indemnity insurance.

On this point surely every solicitor in the country should be celebrating because presumably it means that if every solicitor sets up as a freelancer rather than working via a solicitors firm, they no longer need to be regulated by the SRA and deal with the various regulations that end up tying up partners in knots for hours on end every night trying to stay compliant? Surely the future for the profession is simply for everyone to turn into a direct access solicitor and try to avoid regulated work? Is this the plan of the SRA to essentially write themselves out of the future of a good chunk of the legal profession and end up in the same way law firms in the USA work with individuals lawyers being named and identified as acting for their clients, and no longer working as law firms? 

Are solicitors going to end up directly competing with barristers on every single front including working out of chambers?

 Do all the requirements for individual solicitors to have their own professional indemnity insurance blow any chances of this out of the water?

The recent mess that the IR35 provisions and HMRC tightening in local authorities has caused on the locum scene is apparently heading also into private business arrangements, and it is going to be interesting to see how the new decision to essentially remove most regulation from freelance solicitors is going to impact on this in defining self employment, because if solicitors are now able to be freelance and providing their services directly to clients then presumably they fall well and truly within the definition of self employment, and local authorities will not have to adopt such a rigid structure of determining that everybody is not self employed.

On the other front of solicitors working in unregulated companies undertaking unregulated work, I am not entirely sure what the difference is between now and say yesterday, because solicitors have always worked in companies providing unregulated advice. In fact there are armies of solicitor consultants out there now working for legal consultancies which are definitely not law firms, providing unregulated advice to clients. Only the other day I was looking at a website of one of the larger consultancy companies which has sprung up out of the big city firms (and seem to charge some amazing hourly rates) and noted that one of our locum solicitors was listed on their website as being a legal consultant. Presumably they have already sought authority from the SRA to do this and are carrying on practice in an unregulated company providing unregulated advice, and before any decision to change the rules.

So is the change of rules simply a case of the SRA pretending they have a handle over the current situation and changing rules that have been ignored for well over the past 10 years? It remains to be seen what difference in practice any of these changes will make.

 


Jonathan Fagan is Managing Director of Ten-Percent Legal Recruitment and a non-practising Solicitor. Ten-Percent Legal Recruitment provides online Legal Recruitment for Solicitors, Legal Executives, Fee Earners, Support Staff, Managers and Paralegals. Visit our Website to search our Vacancy Database.