Last updated 28 January 2010
Apply for approval of a non-lawyer manager
NL1 notes
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Introduction
A firm which wants to take on a non-lawyer as a "manager" of a recognised body must apply to the Solicitors Regulation Authority (SRA) for approval of that individual, and satisfy the SRA that the individual is fit and proper to take on that role. Form NL1 is the prescribed form for this purpose.
The firm must check that the non-lawyer is eligible for approval before submitting form NL1.
These notes begin with some general comments and then deal with each section of the form.
Key regulatory provisions
The SRA Recognised Bodies Regulations 2009 ("the Regulations") contain the basic provisions regarding the criteria and procedures for approving non-lawyer managers, and for withdrawing approval—see Regulation 3.
Use our change-tracking tool to see the SRA Recognised Bodies Regulations 2009 and recent changes to the Solicitors' Code of Conduct 2007; you can also view other recently amended rules and regulations.
The Solicitors' Code of Conduct 2007 ("the Code") sets out who can and cannot be a manager of a recognised body—see in particular rule 14.01(2), 14.04(1), 14.05(1) and 14.06(1).
There are limits on non-lawyer participation in a firm's structure:
- No more than 25 per cent of the firm's managers (by number, proportion of ownership or voting rights) can be non-lawyers (see rule 14.01(3) in the Code, reproduced at the end of these notes).
- Under s.9A of the Administration of Justice Act 1985 (the Act) a non-lawyer manager must be an individual, not a corporate person.
- Rule 14.01(3)(d) provides that (subject to one exception—see below), every non-lawyer who has an ownership interest (or controls any voting rights) in a recognised body must not only be approved under Regulation 3 but must also be a manager of that body.
- For the one exception in the case of a company recognised body, see rule 14.01(3)(e) and Section 2.
Some key terms
In the form and these notes
"applicant"
means the firm or prospective firm;
"candidate"
means the proposed non-lawyer manager;
"manager"
means a partner in a partnership; a member of an LLP; or a director of a company;
"non-lawyer"
(see
regulation 3.1 and
3.2 of the
Regulations) means an individual who falls into one of the following categories:
- an individual who is not a member (practising or non-practising) of any profession of lawyer of England and Wales (solicitor, barrister, notary, legal executive, licensed conveyancer, patent agent, trade mark agent or law costs draftsman), any European Establishment Directive profession, or any foreign legal profession which is eligible for approval under Schedule 14 to the Courts and Legal Services Act 1990;
- an individual who does not come into the above category, but is a member of a foreign legal profession which is not eligible for approval under Schedule 14 to the Courts and Legal Services Act 1990;
- an individual who is not a solicitor or a practising member of any profession of lawyers, but is a non-practising barrister or a non-practising member of another profession of lawyers, and who is prevented by his or her professional rules or training regulations from changing status so as to be able to be a manager of a recognised body as a practising lawyer.
Whichever of these categories a candidate falls into, the firm must use form NL1 to apply for approval for him or her to become a manager.
If you are a proposed non-lawyer manager, the following (non-exhaustive) examples will help you and the firm decide whether you can be treated as a non-lawyer under the Regulations:
- If you are on the roll of solicitors, you cannot be treated as a non-lawyer, even if you are not practising as a solicitor.
- If you are a lawyer of a profession which has no element of self-regulation, you will not be able to become a registered foreign lawyer ("RFL"), and will be treated as a "non-lawyer" for the purpose of the Regulations.
- If you are a non-practising barrister, and are not eligible to become a practising barrister because you have not done a pupillage, you will be treated as a "non-lawyer" for the purpose of the Regulations. (But if you were called to the Bar before this rule came in, and have limited rights to practise even though you have not done a pupillage, you cannot be treated as a non-lawyer.)
For other terms used in the form and notes, see the glossary of terms.
What approach does the SRA take to granting and rejecting approval?
The Act requires the SRA to approve a non-lawyer before he or she can become a manager of a recognised body. An application will be rejected if the candidate is not eligible (i.e. he or she does not come within the categories of "non-lawyer" set out above). The more fundamental purpose of the approval process is to protect the public and the public's confidence in the legal profession, in that in order to grant approval the SRA must be satisfied that a non-lawyer is suitable to be involved in the provision of legal services and to exercise influence over a recognised body.
The SRA has discretion to reject an application for approval on the grounds set out in Regulation 3.3. The questions in Section 5 and Section 6 of the form mirror the provisions of Regulation 3.3(a) and (b). In considering whether to reject an application on one or more of these grounds, the SRA will take the same approach as that set out in the Guidelines on the assessment of character and suitability which are used in relation to individuals wishing to become solicitors. This is because the same level of honesty, integrity and respect for law is expected from a non-lawyer manager as from a lawyer manager in a recognised body.
Example
An application in respect of a non-lawyer with a conviction for dishonesty or other history of deception will normally be refused, unless confidence can be established in the candidate's present trustworthiness and honesty. The candidate might be able to do this if the behaviour occurred many years ago and there was subsequent evidence of rehabilitation, or if the incident was not of a serious nature, as indicated by the sentence or sanctions applied. The "Guidelines" give examples of the sort of evidence that the SRA looks for in the case of someone with a dishonesty conviction who applies for admission as a solicitor; the same sort of evidence will be required in the case of a proposed non-lawyer manager with a dishonesty conviction.
Information received through the CRB check (see Section 4) will also be assessed in accordance with the Guidelines, and may result in a rejection of the application on one or more of the grounds set out in Regulation 3.3.
The Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2008 applies to an "approved legal services body manager" (i.e. a non-lawyer manager of a recognised body). The candidate must therefore declare spent, as well as unspent, convictions.
Appeals
Under Regulation 7, the applicant can appeal against a decision of the SRA to reject an application for approval under Regulation 3 or to impose a condition on the applicant's recognition when granting an approval under Regulation 3. Note that there are time limits.
Responsibility for the application
It is the responsibility of the applicant (the firm) to make the application for approval, and to confirm that any information provided in connection with the application is correct and complete by signing the declaration in Section 8 of the form. It is the responsibility of the candidate to confirm that any information given about him or her is correct and complete by signing the declaration in Section 7 of the form.
If the form is not fully and correctly completed, the SRA may need to return it for proper completion. This could delay the SRA's decision on whether to approve the candidate.
The SRA may require the applicant or candidate to provide further information at any time.
Please note: Do not assume that information is known to the SRA simply because it is in the public domain or has previously been disclosed to the Law Society, the SRA, another regulatory body, the police, the court or another public authority. If there is any doubt about the relevance of information, it should be included.
If the firm has provided, or thinks that it may have provided, the SRA with information which was or has become false, misleading, or incomplete, in any material respect, it must notify the SRA immediately.
Under Regulation 3.3(c) the SRA may reject an application if the applicant or the candidate fails to disclose, refuses to disclose or seeks to conceal any matter within Regulation 3.3(a) or (b) in relation to the application. Conduct of this kind could also lead to approval being withdrawn and to disciplinary action being taken against the candidate and/or the applicant.
Under Regulation 4.1(c) the SRA may impose one or more conditions on a recognised body's recognition when granting approval of an individual under Regulation 3.
Section 1 – Applicant's details
Name of firm
Please provide the name and head or main office details of the firm applying for approval.
SRA number (if applicable)
If the firm is an existing firm regulated by the SRA, please provide its SRA number.
Prospective firms should obtain form RB1, RB2 or RB3.
Name of contact
Please provide the name of the individual at the firm who can be contacted about this application. This must not be the candidate.
Preferred start date for candidate
This is the date on which you would like the candidate to become a manager in the firm. Approval takes effect from the date of the SRA's decision on the application (unless otherwise stated), and we cannot guarantee to meet the date you specify. For administrative reasons it is advisable for you to submit your application form at least four weeks prior to your preferred start date; but note that the CRB check could take considerably longer than this to complete.
The candidate must not be taken on, or held out, as a manager until he or she has been approved under Regulation 3.
Section 2 – Candidate's details
Member of a professional and/or regulatory body
This section includes a question on whether the candidate is or has been a "member" of a professional and/or regulatory body. It is not relevant whether the basis of regulation is statutory or contractual. Examples of professional/regulatory bodies would include the Institute of Chartered Accountants in England and Wales, and the Royal Institution of Chartered Surveyors. The Department for Innovation, Universities and Skills maintains a list of regulated professions. Please provide details of the candidate's profession and professional or regulatory body even if these do not appear in the list of UK regulated professions.
"Member"
in this question includes being regulated by, or being under the professional oversight of, the body in question, whether or not the candidate is currently practising as a member of that profession.
"Profession"
in this section includes a person approved and regulated by the Financial Services Authority as an "approved person" under the Financial Services and Markets Act 2000.
Has the candidate ever worked in legal services?
You should tick "yes", and provide details, if the candidate has worked in any of the following:
- the practice of a solicitor, licensed conveyancer, trade mark agent, patent agent, notary, or law costs draftsman;
- barristers' chambers;
- a law centre or advice service operated by a charitable or similar non-commercial organisation (e.g. a citizens advice bureau);
- a business offering claims management services;
- a business offering immigration advice or services;
- a business which refers potential legal claims to another business (whether as a main or incidental part of its business);
- an in-house legal team e.g. in commerce and industry, central or local government, or in a public body.
The phrase "worked in legal services" should be understood as involvement by the candidate in any capacity, e.g. proprietor, partner, director, employee, consultant, locum, or volunteer.
Is the candidate to be a director / registered member / owner of share in a company recognised body?
If the applicant recognised body or prospective recognised body is a company, the candidate will almost always have to be a director. However, the exception in rule 14.01(3)(e) means that the candidate does not need to be a director if the following applies:
- no share in the company is owned by the candidate as an individual;
- some or all of the shares in the company are owned by an authorised non-SRA firm or European corporate practice which is a legally qualified body;
- the legally qualified body is either a partnership or an LLP;
- the candidate is a partner in the partnership or a member of the LLP;
- the partners' agreement or members' agreement prevents the candidate from participating in any decisions about the company; and
- the candidate is approved under Regulation 3 as suitable to be a manager of a recognised body.
If the above applies, and the applicant is answering "no" to the question whether the candidate will be a director, the applicant must provide written confirmation and an explanation along with the form.
Section 3 – Capital contribution and profit share
Please provide details and an explanation if non-lawyers will be contributing more than 25 per cent of the firm's capital and/or receiving more than 25 per cent of the profits of the firm. The proposed arrangements must be consistent with the statutory requirements regarding non-lawyer ownership and control of a recognised body.
Section 4 – Criminal Records Bureau (CRB) standard disclosure check
The SRA will not make a decision on the application unless the candidate's CRB standard disclosure check has been completed. The CRB check is likely to take several weeks to complete.
Section 5 – Regulatory history
Under Regulation 3.4(c)(i) the firm must "cooperate, and secure the cooperation of the individual concerned, to assist the SRA to obtain all information and documentation the SRA requires in order to determine the application". It is therefore the responsibility of the firm to obtain the required information from the candidate.
"Authorised non-SRA firm" means a sole practitioner, partnership, LLP or company authorised to practise by another approved regulator and not by the SRA. The other approved regulators are
Question (d) of Section 5 of the form asks, in respect of a matter involving the candidate, whether the applicant, the candidate, or any recognised body or Authorised non-SRA firm in which the candidate has previously been a manager or employee, has been "notified in writing by the SRA (or previously by the Law Society) that it does not regard as satisfactory an explanation given at the SRA's (or Society's) request". If there was such a notification, you must answer "yes" on the form, whether or not the notification was subsequently followed by a finding of breach, a rebuke, or a reprimand by the SRA or the Society.
In question (e) of Section 5, examples of an "approved regulator, professional or regulatory tribunal, or regulatory authority" include the "approved regulators" listed above, and, for example
- any UK or overseas law society or bar association
- Institute of Chartered Accountants in England and Wales
- Royal Institution of Chartered Surveyors
- Financial Services Authority
- Office of the Immigration Supervision Commissioner
- Financial Services and Markets Tribunal
- Claims Management Regulator (under the Compensation Act 2006)
- General Medical Council
- General Dental Council
- Health Professions Council
- General Social Care Council
- Care Council for Wales
- Institute of Chartered Secretaries and Administrators
- General Teaching Council for England
- Any UK or overseas equivalent of any of any approved regulator, professional or regulatory tribunal, or regulatory authority.
This list is not exhaustive.
Section 6 – Character and suitability of candidate
It is the responsibility of the firm to obtain the information from the candidate necessary to answer the questions in this section. If there is any doubt about the relevance of information, it should be included.
Question 14 in this section asks whether the candidate has ever been involved in "other conduct" which calls into question his or her honesty, integrity or respect for law. The SRA will interpret this question broadly. Firms must use the question to provide information about matters which are not the subject of another question on the form, but are or may be relevant to the consideration of the candidate's character and suitability—for example, a caution, warning, Anti-Social Behaviour Order, or charge or conviction relating to an offence which is not indictable. The information provided will be assessed in accordance with the "Guidelines" referred to under Section 2 above.
Section 7 – Candidate's declaration
The candidate's full name must be given and must be legible, and he or she must sign and date the declaration.
In signing the declaration the candidate states that he or she understands that the SRA's rules (for example, the Solicitors' Code of Conduct and the Solicitors' Accounts Rules) apply to all managers and employees of a recognised body, including approved non-lawyer managers; and that as a manager of the firm the candidate will be subject to the disciplinary powers and sanctions of the SRA and the Solicitors Disciplinary Tribunal.
Also, in signing the declaration the candidate states that he or she understands that the results of the CRB checks and other checks on the candidate's character and suitability may be disclosed to the firm submitting the application.
Section 8 – Applicant's declaration
Please ensure that the full name of the person making the declaration is given and is legible, and that he or she signs and dates the declaration on behalf of the firm. That person must be a solicitor or registered European lawyer and a partner, member or director in the firm.
Please note: The declaration includes a confirmation that the firm has obtained and will keep certain information and documentation about the candidate. The information and documentation required are as follows:
- (1) Any previous name(s) (surname or forename), including any other name by which the candidate is known.
- (2) The candidate's previous private addresses within the last five years.
- (3) The candidate's passport number(s).
- (4) The candidate's employment history over the last ten years, with an explanation of gaps and details of any periods of self-employment.
- (5) Details of directorships held by the candidate over the last ten years.
- (6) Details of the candidate's business interests, employment obligations or other situations which might conflict with the candidate's role as a manager.
- (7) Whether any business in which the candidate is or has been a senior manager, partner or director has ever been subject to civil or criminal proceedings or investigations by public authorities.
- (8) Whether the candidate is aware of any intention by any third party to bring against the candidate any bankruptcy proceedings, or proceedings that may lead to a county court judgment or other judgment debt.
- (9) Whether the candidate has ever been refused registration under the Money Laundering Regulations.
Do not submit NL1 unless you have obtained this information.
Do not send the information to the SRA.
The purpose of requiring the firm to collect and obtain this information is to enable the firm and the SRA to work together, in the public interest, to ensure that non-lawyers do not become managers of recognised bodies unless they are fit and proper to do so. It will also assist firms with their own due diligence checks before taking on a new manager, and help them to verify the information they give to the SRA in this form. Some insurers expect firms to have made checks of this kind as part of their risk-management processes.
Under Regulation 3.4(c)(iii), the firm must keep the information and documentation in (1) to (9) above for a period of not less than six years after the candidate has ceased to be a manager of the applicant firm.
Under Regulation 3.6, the SRA may at any time require the production of information or documentation from:
- (a) an approved individual;
- (b) a recognised body in which an approved individual is a manager; or
- (c) the body which originally obtained approval for that individual and holds information and documentation under Regulation 3.4(c)(iii),
in order to satisfy the SRA that the individual met the criteria for approval or continues to meet the criteria for approval.
It is important to note that under Regulation 4.1(c) the SRA may impose one or more condition on a recognised body's recognition when granting approval of an individual under Regulation 3.
Section 9 – Fees
The fee for this application is £250. Full payment must be attached to the application. Please refer to the information on ways to pay.
Section 10 – Completing and returning the form
Please make sure you complete all the relevant boxes on the form and have supplied all additional information required.
If you make an error during completion of the form please put a line through any deletions. Do not use liquid paper.
Please list details of all additional pages, other supporting documents and information, and any other forms (e.g. form RB1 applying for a new partnership to be recognised as a recognised body) on an enclosure list. Please mark each document clearly with the section of the form to which it relates.
Please send your form and all supporting documents to:
Operations Unit, Solicitors Regulation Authority, Ipsley Court, Berrington Place, Redditch, B98 0TD
or
DX 19114 Redditch
You can contact us on
To link to this guidance, please use
www.sra.org.uk/NL1.