Summary of public section of the SRA Board meeting

The Board has requested further work to be carried out on the plan, with the principal aim of making it simpler, with a small number of high priority objectives with clear measurables. The revised plan will be considered in the public section of the Board meeting on 15 February.

The Board considered the SRA work programme for the earlier part of 2010.

Expected highlights are:

Regulatory reform – consultations on outcomes-focused regulation, the licensing of ABSs, a new Code of Conduct, revisions to the Solicitors' Accounts Rules and the assessment of the financial stability of firms.

Corporate governance – work with the Law Society on perfecting corporate governance arrangements, ensuring the effective separation of regulatory and representative functions, with the aim of jointly submitting proposals to the Legal Services Board in April.

The Hunt Review – the Board will shortly consider a detailed analysis of Lord Hunt's recommendations.

The Enabling Programme – the business case for the Enabling Programme was due to be considered by the Law Society Management Board for submission to the Law Society Council in February.

Compliance – progress with the SRA mortgage fraud project is expected to be reported to the Board in February. The Board will also consider the future of the Assigned Risks Pool and the successor practice definition in the light of the consultations currently being held.

Equality and diversity – results of the staff survey carried out in 2009 and the outcome of the research into why black and minority ethnic solicitors feature disproportionately in the work of the SRA.

Fee modelling – in February the SRA Board will consider the outcome of the second consultation, held jointly with the Law Society, on a fairer practising fee structure.

Communications – there will be emphasis on improving communication with the profession, in particular corporate firms. This will support the work towards outcomes-focused regulation and the advent of ABSs.

Samantha Barrass, director of the SRA corporate regulation project, briefed the Board. She described the target of achieving outcomes-focused regulation in 2011 as "aggressive" and said it "involved quite a long journey", but nevertheless it would be a process of "evolution, not revolution". Ms Barrass was anxious to manage expectations regarding the implementation of outcomes-focused regulation and stressed there would still need to be some rules, in order to provide "regulatory grip", particularly in the areas of default and indemnity. Key conditions of success were ensuring that SRA staff were equipped to regulate under the new approach, and that the profession was ready to apply the new principles.

Hugh O'Brien briefed the Board on the next stage of the IT aspect of the Enabling Programme – the 'proof of concept' stage. His chief concerns are that the system should be fit for purpose and still cost-effective over the longer term. A key issue is whether it is necessary to migrate all the data stored in the current systems. Completion of the IT work is due to finish in mid-2012. A Board member pointed out that if the current SRA IT systems, which are no longer supported, were to collapse, it would amount to "reputational disaster".

Marcus Sephton and Janet Marton of KPMG briefed the Board on the Financial Stability project, which sits alongside the work being done on Solicitors' Accounts Rules within the corporate regulation programme. KPMG are helping the SRA to assess the extent to which the financial stability of firms affects the public interest and to identify the key financial risks that the SRA needs to be on guard against.

They noted that the number of interventions into firms had risen in recent years. Increased competition, global economic troubles, technological change and tougher credit conditions would all make the regulation of legal services firms yet more challenging. KPMG considers that reactive approaches by the SRA are to be more likely to result in firms being wound up, whereas more proactive approaches were likely to enable the SRA to help firms before they got into financial difficulties.

KPMG's view is that firms should have a duty to tell the SRA when they are in difficulties and there should be a new Core Duty on financial management. There should not be capital adequacy requirements, though access to funding might be a criterion.

The Board gave detailed consideration to which standard of proof – civil or criminal - should be applied to cases not referred to the Solicitors Disciplinary Tribunal (SDT). A Rule stipulating the civil standard was made in June 2009, but the Master of the Rolls and the Lord Chancellor declined concurrence. The SDT and the Law Society were concerned that the SDT, in line with its standard practice, would continue to apply the criminal standard when dealing with any appeals against decisions that had made by the SRA.

The rule would now have to be approved by the Legal Services Board, not the Lord Chancellor.

The Board concluded that the SRA should adopt the same standard of proof as other professional regulators, rejecting the argument that lawyers required a higher standard of proof in their disciplinary proceedings.

The Board decided that it would be in the public interest to adopt the civil standard of proof and resolved to submit the Rule for approval by the Legal Services Board.