SRA make a major change to the rules regulating law firms
As of the 25th November 2019, new SRA regulations allow solicitors to practice in unreserved matters using the title ‘solicitor’. Many solicitors have been providing legal services through unregulated and regulated practices for a number of years, but without official endorsement from the SRA. The new regulations also now state officially that professional indemnity insurance is not required for solicitors to operate unregulated.
For the legal industry, this should have a significant impact as solicitors will be able to offer an increasingly commercial service at lower hourly rates. This impact, however, will only be achievable if solicitors and their firms make significant structural changes to their practices.
On the structural changes required, Robert Taylor, CEO and general counsel of 360 Law Group, said: “My belief is that the new changes will have very little effect, if any at all, in reducing fees for the legal consumer. The only way to reduce fees, as in any industry, is to reduce overhead cost, and that cannot be achieved whilst retaining prestigious city-centre offices, outdated systems and a myriad of costly support staff. In my view, and as we have demonstrated consistently over 5 years, you have to run a law firm like any other commercial venture – you have to deliver high-quality services utilising highly experienced and qualified staff delivered from a highly efficient and cost-effective base.”
Taylor draws on his experience in the legal profession as 360 Law Group has been providing its expert legal services on a global basis through both regulated and unregulated practices for a number of years. Their clients, which range from individuals and SMEs to public companies and multinational corporations, benefit from a distributed infrastructure that consistently produces a global overhead of less than 10% of turnover.
While the new ruling is set to increase the prominence of unregulated practices, some experts express the opinion that the change is not enough to cause true industry disruption. The current cost burden model of the legal industry needs to change to a cost-effective model for the new regulations to have any major impact.