Radical changes to the SRA Handbook and Accounts Rules

Changes to the SRA Handbook and Accounting rules bring important changes to legal practice.

The Solicitors Regulation Authority (SRA) has replaced its Handbook with the SRA Standards and Regulations and has simplified its Accounts Rules.

In replacing the old Handbook, the SRA has:

• Reduced the number of Principles from 10 to 7. These can be applied both within traditional legal practices and elsewhere.
• Introduced a new Principle – honesty. The historic Principle of serving the client has been retained.
• Changed the emphasis: instead of unreservedly applying Principles in a prescribed manner, there is more latitude in terms of how lawyers apply them.
• Simplified the previous Code of Conduct, which was criticised for its length, complexity and for failing to adequately distinguish between the responsibilities and expectations of individuals and organisations. The Indicative Behaviours which were part of previous codes have been deleted.
• Streamlined the Accounts Rules. Their focus remains safeguarding the client’s funds and ensuring the separation of it from the firm’s money so that it is used only for the purpose intended by the client. However, the new set has been designed to be simpler to follow and interpret. The rules also cover the use of third-party managed accounts.
• Changed the Insurance Distribution Directive.  Now all insurance contracts must cohere with the client’s requirements. Also, the lawyer must provide a personalised recommendation as to why the selected product best suits the client’s purpose.

Firms should have procedures and mechanisms for compliance that are proportionate and appropriate to the number and nature of its client transactions and to the amount of monies it holds or receives. This allows the organisation the means to exercise professional judgement.

Some small and specialised firms do not hold significant sums of transactional client money. Others may hold a huge amount. The decision as how best to safeguard client funds should rightly be taken at local level. This is just one of several ways in which the changes offer businesses greater flexibility.

Getting practice ready for the changes

Keep the regulator at bay: ensure your documentation is up to date and complies with the changes in procedures and terminology stipulated by the SRA.

Keep staff in the loop: everyone from the senior team down will be affected by the changes. Ensure that your people know how the revisions affect their responsibilities.

Educate your personnel: staff with specific responsibility for compliance will need to know the changes to Standards and Regulations and Accounting Rules from front to back. However, others in the organisation may need an overview as it applies to their specific duties.

The upshot – a simpler and shorter book

The SRA has made these regulations more digestible and practical. For example, the new Accounting Rules runs over considerably fewer pages, sections have been removed, condensed, and guidance notes shortened.

Eve Dullabh - Managing Director

Law Training Centre

[email protected]