Exemplary conduct

The reforming zeal of the SRA will be with us long after the summer has faded with the entry into force of new rules that will affect the profession long term.

Practising certificates

The SRA Practising Certificate Regulations became law in July 2009. They deal with certain events which solicitors are obliged to report to the SRA which may lead to conditions being imposed on PCs. Practitioners will recall the list of events in section 12 of the Solicitors Act 1974 which has been replaced by a list in regulation 3. The section 12 events included: outstanding judgments for money, becoming bankrupt and being charged with an indictable offence.

Regulation 3 has repeated the former list and added another event to it '“ the requirement to apply for a PC under regulation 3 if one has ever been a member of a LLP or a director of a limited company which has entered a form of insolvency. This embraces not only the practice of being a solicitor undertaken as an LLP or limited company but also any other type of business. Consequently, ventures by solicitors in family businesses, for example, where the solicitor was a director and which folded would be caught.

The form to complete is REG3 (09-10) and this can be found most easily by putting REG3 into the search function of the SRA's website.

REG3 contains an additional question (number 14) which concerns 'other conduct' affecting your honesty, integrity and respect for law. The guidance makes it clear the SRA expect this question to be answered 'broadly' so as to include any cautions, warnings, ASBOs, non-indictable offences and any investigation by any professional body since last renewing your PC. Again, this did not feature before. Any solicitors affected by those issues will have to give notice using form REG3. A moot area is whether those who have received fixed penalty notices for disorder or retail theft are caught by regulation 3.

There is an exception in regulation 3 if the SRA is already aware and has issued a PC free of conditions but the state of that awareness would, in my view, have to consist an express notification. As insolvent LLPs and limited companies were not within the events in section 12, such express notifications are unlikely to have occurred. Likewise, for the 'other conduct' question.

This year the deadline for notifying was 18 September. If notice has not been given, send REG3 as soon as possible.

As a PC is unlikely to be granted much before next spring whether free of conditions or otherwise those solicitors subject to regulation 3 will have to hold over on this year's certificate. Block renewal via form RF1 for firms or in-house practice is unaffected.

Most firms will now have received the block renewal form (RF1) and a new form (RB1) which are due to be sent to the SRA by the end of October. RB1 requires information about a firm's turnover, work types and ownership, all of which is supposed to be in a similar format to that provided for professional indemnity purposes but is in fact not quite the same. There is also some confusing repetition between the forms about holding client money which the SRA says it will remove from next year's form.

Remuneration certificates

The Solicitors' (Non-Contentious Business) Remuneration Order 2009 came into force on 11 August and repeals the remuneration certificate system. The Legal Services Act 2007 abolished that process and these regulations implement that step.

This means:

• your bills or other notification sent to clients prior to deducting costs from monies in client account or before commencing proceedings to recover costs or must be amended to refer the client or other entitled person to their rights in relation to having the bill assessed by the court under sections 70, 71 and 72 of the Solicitors Act 1974; and
• inform the client or other entitled person in writing that you are entitled to charge interest on the outstanding amount of the bill in accordance with article 5 of the Solicitors' (Non-Contentious Business) Remuneration Order 2009.

It is essential that any provisions about interest are in your terms of business otherwise you may only recover interest on non-contentious costs in accordance with the Law Society's determination of interest due or the outcome of detailed assessment subject to any agreement with the client. These new provisions are in an 'emergency rule' which is rule 2.08 of the code and guidance notes 48 and 49A.

Consultants and professional indemnity cover

Following the amendment of the Code of Conduct earlier this year, the definition of 'employee' changed (Glossary Rule 24) so as to make it clear that consultants or locums working non-exclusively for a firm are not employees. This is so whether such a person works for all or part of a working week. This is very different to the former position '“ it would be wise to check with your PI provider that any consultants working in this way for your firm are covered by your PI policy, otherwise they will have to effect their own cover.

Next month Tony Guise will look at the position of law firm mergers '“ the opportunities and the pitfalls.

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