Freelance ambitions

Further repercussions of these strange times are the number of career-changing decisions currently being made.

Some decisions are made not from choice but, sadly, are caused by the economic reality of covid-19.

Others are as a consequence of time away from the hamster wheel and the realisation that there are alternatives.

For many lawyers and for many reasons, the circumstances of 2020 have created the impetus for change and the decision has been made to go solo – but there are compliance issues which must be considered.

Sole practice means being able to make an individual choice rather than being funnelled down the team path; having more influence over work and client decisions; less internal competition; less pursuit of billing targets in the workplace; being empowered to develop one-to-one relationships with clients; and generally have more flexibility.

Lockdown lawyering has shown us that we can work differently with greater freedoms.

Undoubtedly this can be both liberating and exciting.

However, it will also be a high-risk strategy if your understanding of regulation, compliance and ethics is not solid and if the basis on which you build your new practice lacks these essential foundation stones.

When leaping into a new career path, the building blocks must come first – decisions must be made as to how to practice.

This is particularly relevant for any prospective sole practitioner who has two alternatives: to trade as a recognised sole practitioner or become an independent or freelance solicitor.

The recognised sole practice alternative is the more established and familiar concept.

Your sole practice is a type of entity authorised and regulated by the Solicitors Regulation Authority (SRA) as a business able to provide legal services.

This triggers the need for the business to conform and comply with the SRA Standards and Regulations (STARs) so that, for example, the conditions in the regulator’s authorisation of firms rules, the code of conduct for firms and the accounts rules are met.

The business must have a compliance officer for legal practice and a compliance officer for finance and administration; hold professional indemnity insurance which complies with the SRA’s minimum terms; pay annual firm-based periodic fees; and so on.

Unauthorised business

The newer choice is to practise as a freelance or independent solicitor.

You are personally authorised by the SRA and hold a current practising certificate, but your business is not an authorised practice.

This was introduced largely to reflect the statutory position in the Legal Services Act 2007.

The point is, subject to certain decisions about what you are doing, if you’re meeting conditions of your unauthorised business model, you can now be a little more freestyle.

With unauthorised practice, a number of decisions must be made with the SRA Authorisation of Individuals Regulations regulation 10.2 as your starting point.

Your decisions about format start with a consideration about whether you intend to deliver reserved legal activities to members of the public and whether, in these circumstances, you are able to meet the conditions set out in rule 10.2(b).

Particularly pertinent questions if you are intending to provide conveyancing, litigation or other reserved services are as follows: 

•    Can I really do this without employing anyone to help?
•    Will I be able to manage without holding client money?
•    Will I secure appropriate indemnity insurance to protect both me and my clients?

Additionally, bear in mind that there are prohibitions on delivering claims management, immigration ser-vices and financial services (this is for a variety of reasons).

Anyone intending to deliver these services would need either to be authorised by the appropriate regulator or re-vert to a recognised sole practice under SRA regulation.

The need to observe anti-money laundering legislation is another consideration.

Any sole practitioner trading in any style, who constitutes an ‘independent legal professional’ as described in the money laundering regulations, must have approval for their role as an owner of their business, whether that is an authorised practice or not.

This will be obtained through notification to the SRA.

Further essential steps address compliance in practice; and the need to understand the relationship and conversations which you will continue to have with the SRA.

As a recognised sole practitioner, this is more obvious – both you and your authorised practice will be of interest to the regulator.

With freelance practice, it might be a natural assumption to think that you fall off the regulatory radar. Nothing could be further from the truth.

Despite the fact that you are not working in an authorised entity, you are an authorised person and the fact that you are practising in this untried and untested new style makes you of great interest to the regulator.

The regulator will be curious to know whether compliance and ethics are in evidence. It is important to remember that much of the STARs remain relevant.

Demonstrating your awareness of this is vital and so you need to consider points such as:

•    Can I demonstrate that my fundamental behaviours are principled and that in my professional and private lives I adhere to the SRA principles?

•    Have I identified the risks attached to my freelance business and do I take adequate steps to mitigate these?

•    If the SRA asked me, could I demonstrate compliance with the SRA code of conduct for solicitors which applies notwithstanding that my business is not authorised?

•    Do I demonstrate that I deliver ethically based legal services? For example, am I confident that I understand first principles so that I consider conflicts of interest, confidentiality and disclosure, or my position if I give an undertaking?

•    Do I give my clients sufficient information about my regulated status and the protections which they have, and more importantly don’t have, when they instruct me?

•    Am I complying with the requirements of the SRA transparency rules?

•    Do I have the capacity and the competence to ensure that ethics, professionalism and judgement is built into the way I provide services?

Perhaps the conclusions to draw are that while sole practice, in whatever style, might be the right lifestyle choice, there are a number of regulatory considerations that exist.

It is prudent to ensure that your next steps and the decisions you make factor in the work that is needed to ensure compliance.
 

Tracey Calvert is a consultant at Oakalls Consultancy Limited oakallsconsultancy.co.uk

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