Legal Services Act - new rules and regulations

Last updated 1 July 2009

Solicitors' Code of Conduct (LDPs and Firm Based Regulation) Amendment Rules 2009

The Solicitors' Code of Conduct was amended on 31 March 2009 to support firm-based regulation and LDPs.

The most significant changes are made to

• rule 12 (framework of practice);
• rule 14 (incorporated practice—this rule will be re-titled "recognised bodies"); and
• rule 20 (requirements of practice).

Collectively, the rules above establish the regulatory structure for the new regime.

Consequential amendments appear throughout the Code, along with various other changes. These ensure that our rules apply to all "managers" and employees in firms. Significant changes include

• rule 5 (persons "qualified to supervise");
• rule 7 (publicity);
• rule 9 (referrals of business).

Use our change-tracking tool to see the recent changes to the Code of Conduct.

Solicitors' Accounts (Legal Services Act) Amendment Rules 2009

The majority of changes to the Solicitors' Accounts Rules 1998 (SAR) that came into effect on 31 March 2009 reflect the introduction of LDPs and firm-based regulation.

The SAR cover sole practitioners, partnerships, companies, LLPs, practices with non-solicitor lawyers as managers, and practices with up to 25 per cent of managers who are not legally qualified. The SAR also apply to the individual managers and employees of those practices, and to in-house lawyers.

The position of managers or employees in firms regulated by other approved regulators, such as the Council for Licensed Conveyancers, is dealt with in rule 5(d) and note (iii) to rule 5. All managers are permitted to authorise client account withdrawals but need to have an appropriate understanding of the requirements of the rules. Note the relaxation of the criteria relating to when a FILEX or licensed conveyancer may sign on client account.

The Legal Services Act has abolished the concept of a "controlled trust", so all money held by a practice is either client money or office money. This means that the same interest provisions apply to all client money, including money previously defined as "controlled trust money".

The statutory basis for interest certificates has been removed, so interest complaints are now dealt with by the Legal Complaints Service.

The Act also enables the introduction of more-flexible, risk-based provisions for the delivery of accountants' reports, and requires the introduction of a mandatory whistleblowing duty on reporting accountants.

Finally, the opportunity was taken to make some clarificatory changes:

• rule 2(1) on the mandatory nature of the notes to the rules;
• rule 15(2)(d) on using a client account for paying a sum in lieu of interest;
• note (viii) to rule 15 on the aggregation of client accounts;
• note (iii) to rule 16 and note (iia) to rule 17 on including money withheld from a client account in the monthly reconciliations;
• paragraph 2.2 of the Guidelines for accounting procedures and systems on access to the online version of the SAR;
• paragraph 5.6 of the Guidelines on including digital images of paid cheques in a firm's retention policies and systems.

Use our change-tracking tool to see the recent changes to the Solicitors' Accounts Rules.

SRA Recognised Bodies Regulations 2009

These regulations replaced the Solicitors' Recognised Bodies Regulations 2007 on 31 March 2009. They require all new partnerships, as well as companies, LLPs, etc. to apply for recognition before being able to provide legal services, and they deal with

• the application process;
• initial recognition;
• renewal of recognition;
• approval of a non-lawyer individual as suitable to be a "manager";
• conditions on recognition, etc.

Use our change-tracking tool to view the SRA Recognised Bodies Regulations 2009.

SRA Practising Regulations 2009

These new regulations, which came into force on 1 July 2009, will deal with

• applications for practising certificates;
• applications to be a recognised sole practitioner;
• the register of solicitors with practicising certificates;
• the register of European lawyers, and the register of foreign lawyers.

Use our change-tracking tool to view the SRA Practising Regulations 2009.

Solicitors' Financial Services (Scope) Amendment Rules 2009

These rules, which came into effect on 31 March 2009, make the necessary consequential but fairly minor amendments to support LDPs and firm-based regulation, and mainly concern redefining certain terms.

Use our change-tracking tool to see recent changes to the Solicitors' Financial Services (Scope) Rules 2001.

Solicitors' Indemnity Insurance (Amendment) Rules 2009

These rules, which came into effect on 31 March 2009, include consequential amendments to support LDPs and firm-based regulation. They provide that

• individual solicitors and individual registered European lawyers (RELs) and registered foreign lawyers (RFLs) who are engaged in private practice should continue to be covered by compulsory professional indemnity insurance through their firms;
• the compulsory professional indemnity insurance requirement should apply to all entities authorised by the SRA;
• any partnership or sole practice that can only be authorised by the SRA should be covered by the compulsory indemnity insurance scheme in order to protect clients, even if it has not obtained recognition by the SRA nor has it been held out as being regulated by the SRA;
• any unauthorised partnership or sole practice that can be authorised by the SRA or another approved regulator should not be covered by the SRA's compulsory indemnity insurance scheme;
• firms authorised by another regulator should be excluded from the SRA's compulsory professional indemnity scheme;
• firms that cannot be authorised by any regulator should be excluded from the SRA's compulsory professional indemnity scheme.

Use our change-tracking tool to see changes to the

• Solicitors' Indemnity Rules 2007,
• Solicitors' Indemnity Insurance Rules 2008.

Solicitors' Training Regulations 2009

These regulations replaced the Training Regulations 1990 with effect from 1 July 2009.

Use our change-tracking tool to view the Solicitors' Training Regulations 2009.

Qualified Lawyers Transfer Regulations 2009

These regulations replaced the Qualified Lawyers Transfer Regulations 1990 with effect from 1 July 2009.

Use our change-tracking tool to view the Qualified Lawyers Transfer Regulations 2009.

Solicitors' Admission Regulations 2009

These regulations replaced the Solicitors' Admission Regulations 1994 with effect from 1 July 2009.

Use our change-tracking tool to view the Solicitors' Admission Regulations 2009.

Solicitors (Keeping of the Roll) Regulations 1999

These regulations were amended on 1 July 2009 as part of a general updating of the rules to introduce firm-based regulation and legal disciplinary practices as provided for in the Legal Services Act 2007.

Use our change-tracking tool to view changes to the Solicitors (Keeping of the Roll) Regulations 1999.

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