The objective of the Regulatory Column in Legal News is to keep local practitioners reasonably up to date with regulatory developments and SRA consultation papers. Here is the fourth – I hope you will enjoy your read.
1. Payment of Referral Fees
in PI Cases
It is over three years since LASPO banned referral fees in personal injury cases. The SRA introduced new outcomes in chapters 6 (introductions) and 9 (referrals) : firms should neither pay (outcome 9.8) nor be paid (outcome 6.4) a prohibited referral fee. The SRA has now issued a warning for various risk factors, including the avoidance of the statutory ban with poor or unethical practice which may breach the Code of Conduct and compromise clients’ best interests. If you carry out PI work, now might be the time to review your compliance - to access the full SRA risk warning see: http://www.sra.org.uk/solicitors/code-of-conduct/guidance/warning-notices/Risk-factors-in-personal-injury-claims--Warning-notice.page
2. New Training Provisions
The old CPD scheme ends in November in favour of a less rigid scheme of “continuing competence”. More thought is now required, emphasising a change from training to learning. In future a lawyer in a fast changing practice area will need to spend more time addressing learning needs to those of a colleague involved in a more routine / settled area of law.
The SRA is keen that their “Competence Statement” (‘CS’) should be used as the basis for learning and development at all levels of the profession including ongoing learning.
The CS is arranged under four headings: (1) ethics, professionalism and judgement, (2) technical legal practice, (3) working with people and (4) managing themselves and their own work
On inspection the SRA will want to see (1) how learning and development needs were established and (2) how it was thought that the training addressed those needs. Merely viewing a webinar or sitting through a session will no longer be sufficient. The SRA is keen to see solicitors taking a more mature approach to how every practice should provide the “proper” level of service required by Principle 5 of the Handbook : those looking to see what is the minimum that they have to do to comply, risk missing the point.
3. New insurance regime
The Insurance Act 2015 has introduced a new duty on solicitors’ firms to make “a fair presentation of the risk” to insurers. Clients remain protected but (as before) the insurer will have recourse against the firm for non-disclosure. The meaning of making “a fair representation of risk” is not entirely clear. The SRA has issued guidance at www.sra.org.uk/solicitors/code-of-conduct/guidance/guidance/The-Insurance-Act-2015-and-consequential-changes-to-the-minimum-terms-and-conditions-of-professional-indemnity-insurance.page
Firms must have proper risk management procedures in place for identifying and controlling risks : the SRA’s risk index and risk outlooks are a good starting point. Beyond that, firms should discuss with their brokers and insurers what the insurers regard as important.
4. Cybercrime Risks
Many such losses depend on e-mail intercepts. It is not possible to exclude liability for losses that a client may sustain if they fall into the category of “civil liability” - see SRA Indemnity Insurance Rules. In this context a warning in the engagement correspondence and/or email footer might be sufficient for the firm to avoid blame by having advised clients of the risks. One suggestion is:
“Please be aware that there is a significant risk posed by cyber fraud, specifically affecting email accounts and bank account details. Please note that our bank account details will not change during the course of a transaction. Please be careful to check requests for funds or our account details with us in person if in any doubt. We will not accept responsibility if you transfer money into an incorrect account and it is also unlikely that your bank or building society will offer any refund for any payment you authorise in such circumstances”.
5. Vendor fraud
Two cases (1) Purrunsing v A’Court and House Owners Conveyancers Ltd + (2) P&P Property Ltd v Owen White & Catlin and Crownvent received extensive attention earlier this year.
The different approaches taken in these cases have created some confusion as to the appropriate steps to be taken by both parties to a transaction. Following Purrunsing firms acting for purchasers are being more assertive when probing the identity checks undertaken by the vendor’s representatives. The cases are also a timely reminder as to the importance of not taking the customer due diligence provisions of the Money Laundering Regulations 2007 (“MLR”) as a mere bureaucratic exercise. All involved in the conveyancing process must be wary of the risk of fraudulent sales for the sake of not just their client, but for all the other parties involved also.
6. SRA Open Consultations:
1. “A new route to qualification – the Solicitors’ Qualifying Examination” (2nd consultation)
Closing date 9 January 2017
(NB The Cardiff + District Law Society submitted a response to the earlier consultation paper (March 2016 / see CDLS website) and is preparing a response to this paper)
7. SRA Closed Consultations
1. “Looking to the Future : (1)flexibility and public protection and (2) Accounts Rules review”
(NB: Please note that the CDLS submitted a response to the earlier consultation paper which is available to Members via the Society’s web-site.)
To access to SRA Consultation papers: http://www.sra.org.uk/sra/consultations/consultations
Solicitor and Honorary Secretary for Regulatory Matters for Cardiff & District Law SocietyHugh@HPConsult.co.uk
Hugh Price Legal Consulting Ltd, is an associate member of Infolegal, a national group of independent regulatory consultants.
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