News releases

The SRA today welcomed the publication of the Hunt Report on the Regulation of Legal Services, and announced that it is working with City and other commercial law firms to establish a new approach to regulating law firms with sophisticated quality assurance systems.

SRA Chair Peter Williamson said:

"In his report Lord Hunt makes a large number of constructive suggestions, many of which reinforce and complement the SRA's programme of public interest reforms. In particular, the recommendations on the regulation of law firms, and on improving the governance arrangements of the Law Society and SRA, are thoughtful and welcome contributions to the work we are undertaking in consultation with the Law Society and Legal Services Board. We shall consider and respond fully to Lord Hunt's recommendations soon.

"We are also delighted to announce that representatives of some of the major corporate law firms have agreed to work with us on a pilot programme to address issues arising from Nick Smedley's review of Corporate Legal Work. The SRA is committed to creating regulatory arrangements which will command the wholehearted support of clients and regulated firms, ranging from sophisticated corporate clients and large international firms at one end of the spectrum, to vulnerable individual clients and small law firms at the other.

"This work—which I have asked Charles Plant, as incoming Chair of the Board, to lead—will help us build confidence, enhance the SRA's skills, and develop new approaches to regulating law firms based around the quality assurance of firms' own management of risk."

A small working group involving the SRA and representatives of a number of the major corporate firms has been set up to advise on implementing the new approach, and it is the confident expectation of the SRA that that approach will be extended to other qualifying firms in due course (see notes to editors below).

A London office is being set up by the SRA to help develop effective working relationships with commercial practices and employees with specific expertise in the corporate legal sector will be recruited to enhance skills in this area.

Notes to editors

More detail about the SRA's approach to the regulation of corporate law firms follows:

• The SRA and its incoming Board are committed to creating regulatory arrangements for the corporate legal sector which will command the wholehearted support of corporate law firms and their clients. We recognise that we need to move quickly to build confidence, enhance the SRA's skills, and develop effective working relationships.
• We understand the important part which ease of access will play in the promotion of an effective regulatory regime. There will be a London office of the SRA in which the Chair and Chief Executive will spend time. This office will facilitate face-to-face dialogue between the SRA and the corporate sector, including both firms and clients. We aim to have it up and running before the end of the current year.
• We will use the London office to pilot new approaches to regulating the sector, based on the quality assurance of firms' management of risk. This work will involve both the very large and some smaller firms with sophisticated quality assurance systems.
• We are bringing in people with appropriate background and expertise to help us with this start-up work, which will produce the permanent outcomes. We have already identified people with experience in financial regulation, and will identify and recruit people with City law firm expertise who will lead our piloting work.
• We consider it essential that there should be a distinction between the quality assurance and relationship management functions to be developed in the pilots, and formal enforcement work. At the same time, we are in no doubt that the whole range of regulatory activities which may affect the corporate sector must be undertaken by those with appropriate experience, knowledge and skills.
• The London office and the corporate work of the SRA will be the responsibility of the SRA's CEO, accountable to the SRA Board. A "semi-autonomous division" within the SRA is not the way forward, and is unnecessary given the approach set out here.
• The regulation of the corporate sector will not be held back by the developing regime for ABSs. On the contrary, lessons from the early piloting of the new approach to the supervision of sophisticated firms, as discussed in Smedley, will inform the SRA's wider regulatory approach.
• We will establish—as a priority—a Client and Practitioner Panel, supported from the London office, which will be crucial to the continuing development of relationships with the sector, including the review of Rules which is already in train.