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2017 - The State of the Solicitors Profession - A Year in Review

In our pre-Christmas article last year, we asked what 2016 would be remembered for, the vote to leave the EU (now rebranded as the “EU 27”) or the spate of high profile celebrity deaths? Well 2017 didn’t seem to have as many of the latter, but the whole rumbling mess of negotiations with the EU has dragged on seemingly interminably, and as we write this article, a “deal” has been done. The first stage in the negotiation appears to be complete, but no doubt 2018 will be equally as tedious on the subject.

For the solicitors’ profession the Solicitors Regulation Authority continues to press ahead with its regulatory reforms, mounting many consultations, the answers to which are interpreted generally as “overwhelmingly positive.” We challenge anyone to read the responses to the consultations and conclude that they are indeed overwhelmingly positive. At best they can be described as cautious or neutral, and rather than answering consultation questions, they raise even more questions, none of which the regulator seems inclined to address in its plans for 2018.

But, what was 2017 like for the profession?

Where should we start?

Cybercrime – The profession continued to face an all-out assault by criminals and criminal organisations seeking to defraud them or their clients of money via scams, social engineering, email modification and other assorted confidence tricks. Many firms have responded to this by gaining the government backed Cyber-essentials accreditation, and there appears to be no end to this going forward, with 2018 expected to be a continuation of the cybercrime war.

Probate Fees – The government were set to introduce what was billed as a “Wealth Tax” by sharply increasing probate fees before the April 2017 budget, but in response to an angry swell in public opinion did a “U turn” on the issue and dropped the planned fees. Many will recall this was a double U turn as they also changed the plans to increase National Insurance Contributions for the self-employed. This was welcomed by the profession, who could have been seriously affected by the move, in one of the last areas of law that seems to make a profit.

New Anti-Money Laundering Regulation – June 2017 saw a more stringent set of Money Laundering regulations introduced in the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (we know, it just trips off the tongue…). This was introduced virtually over a weekend, and introduced a new requirement for Money Laundering Reporting Officers in firms to complete a risk review of the firm’s systems, policies and procedures. Any risk gaps identified would require actions by them to reduce, transfer or mitigate the risks. With the speed of the introduction of this regulation, many MLROs weren’t aware of the requirement for some time, and it may be that even now, six months later, some of them haven’t completed this risk assessment…

Criminal Finances Act - The other major Act to be introduced in 2017 is the Criminal Finances Act, introduced in September, that required the profession to ensure that it was not party to tax evasion of any sort, whether by its’ employees, clients or the firm itself, and introduced the new “Unexplained Wealth Order” (UWO) requirement to identify legitimate income versus suspicious income.

Diversity Data Collection – after switching to biennial data collection for diversity information, the SRA required firms to go through this exercise, introducing some slightly new/updated criteria to the data collection forms to allow it to gauge the inclusiveness of some minorities. The only problem with the wider exercise is the number of respondents in the various firms who either answered the optional questionnaire with “prefer not to say” for all questions, or simply declined to answer any of them. The problem then becomes one of a “non-representative” sample, where large chunks of information are missing from the sample, thereby having the potential to dramatically distort any conclusions that the SRA makes on the overall diversity make-up of the firms it regulates. Not that this prevents it from doing so as is evidenced by its conclusions in the Risk Outlook for 2017/2018 it released in July 2017.

Civil Legal Aid Tender – The Legal Aid Agency announced that it would accept tender submissions for civil law categories in the early part of the year, and put together a timetable for the tender process. This timetable did not last long, as the government called a snap election which resulted in the LAA announcing a stay on the tender until after the election. The new timetable announced later in the year only allowed 8 weeks for firms to submit their bids. There were some “firsts” in this process as well, with the LAA refusing to allow firms to merge or be acquired without submitting a bid in the name of the new entity that would be in place by the start of the contract date, 1st September 2018. This led to a great deal of consternation and extra work for those firms bidding who may have been considering a merge or to acquire another.

First “Non-CPD” Year – 2017 was also the first year where firms were not required to make solicitors attend 16 hours of Continuing Professional Development training. This was after the introduction of the SRA “Competence Framework” in 2016, which was received with mixed opinion. We’re sure there were lots of nervous COLPS in firms during October, who had to vouch for the competence of their solicitors as part of the annual practicing certificate renewal scheme, maybe without as much evidence of competence as they would have wanted…

 

The cpm21 year…

For us, some things remained the same in terms of our services, while we responded to other requirements. We still supported hundreds of firms for the Annual Lexcel audits, and although CPD was no more, still trained over a thousand solicitors and support staff on a variety of topics. One of the main areas of training this year was in the new Money Laundering Regulations, and to support this and our client firms, we introduced a comprehensive Anti-Money Laundering Manual, which was supported by the relevant templates and precedents, including one for the new Risk Assessment requirement for MLROs.

Our Professional Skills Course saw another two cohorts of trainee solicitors provided with the mandatory training they need to complete before becoming authorised to practice…

We continued to conduct file reviews, well over a thousand completed as part of our outsourced file review service. For some firms this was a continuation of the service which has had beneficial effects by reducing corrective actions on files for their fee earners, which in turn reduces complaints and indemnity notifications, a massive benefit in today’s stringent professional indemnity market.

For civil clients who wanted support to submit their tenders, we provided this across immigration and asylum, family, mental health, community care, and mediation categories, helping them identify potential issues well in advance of formally submitting their tender applications. We also provided the relevant training for Supervisors required by the Legal Aid Agency for new Supervisors, and existing, who needed a refresher on the subject.

With our expertise in data collation and analysis, we helped firms with the diversity reports that they are required to publish as part of the SRA diversity reporting requirements.

We helped firms respond to the risks outlined by the SRA in their July 2017 Risk Outlook, normally by examining their systems, policies and procedures, identifying gaps and helping them develop responses in their Compliance Plans.

And of course, we supported firms with their general SRA requirements, including where the SRA decided it wanted to audit them…

2018 – The shape of things to come…

We’re already preparing for some key milestones for 2018…

Insurance Mediation – there will be changes to the requirement for information around this in February, which will need firms to change some clauses of their client care and terms of business letters…

GDPR – Perhaps the most talked about topic in the second half of 2017, the new General Data Protection Regulation comes into force in May of 2018. It introduces more stringent, and in some cases new requirements, not just for solicitors, but any organisation in the United Kingdom who store or control Personal Data…

Conveyancing Quality Scheme (CQS) – With recent criticism of the Law Society alleging that the scheme is not robust or audited effectively, 2018 could see the Law Society instigating on site audits of CQS members to demonstrate their compliance to the accreditation… with the danger of non-compliance resulting in revocation of membership and removal from lender panels…

The SRA Code of Conduct 2018 – We mentioned SRA consultations and changes at the start of this article, and the result of that (at least at the moment) is a change to the code of conduct, which will allow individual solicitors to work outside of a regulated firm. This will be achieved by a reduction in the requirements of the existing code, coupled with a split so that regulated firms will have a code of conduct, and individual solicitors have a code of conduct. At this point, the SRA have, as we said, not provided cogent answers to many of the questions in the consultations they have put out on the subject, so there may still be a possibility that this may not come into force. It is also difficult to see how the SRA can consider the effective “deregulation” of the profession, when the bulk of the issues in their own Risk Outlook would indicate tighter regulation is required to protect “consumers” rather than greater freedom. Add to that the other proposed change to the “qualified to supervise” rule, where the SRA are considering allowing newly qualified solicitors to be able to run their own firm’s immediately on qualification…

Anyway, don’t hold your breath…

10 Years of support which will always be there for you…

We’re proud of our record in supporting solicitors with their regulatory and management support needs, and 2017 was our 10th year of doing so. If you’re one of our clients, or a client of the future, you can rest easy in the knowledge that we will continue to provide the support you need to navigate the continuous complexities of running a legal firm and the changes and challenges to come.

You can see that we’re already considering what firms will need next, and in these times of constant change we’ll leave you with the one message;

“We’re still there for you.”

 

Merry Christmas and a Prosperous New Year from the cpm21 team. We’ll see you in 2018.