Principles and risk-based regulation - Reserved legal activities

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Overview

Understanding principles and risk-based regulation in reserved legal activities is vital for future solicitors preparing for the SQE1 FLK1 exam. This guide covers the Solicitors Regulation Authority (SRA) principles, the risk-based regulatory approach, and the six reserved legal activities. We'll look into the legal frameworks supporting these ideas, their practical use, and what they mean for legal professionals in England and Wales.

SRA Principles: Ethics in Legal Practice

The SRA has set seven fundamental principles that guide solicitor conduct:

  1. Act with integrity
  2. Uphold public trust and confidence in the profession
  3. Maintain independence
  4. Be honest
  5. Show competence
  6. Promote equality, diversity, and inclusion
  7. Act in clients' best interests

These principles are mandatory and guide the SRA's regulatory approach, ensuring solicitors adhere to them professionally and personally.

Risk-Based Regulation: Flexible Oversight

The SRA's risk-based approach to regulation allows flexible and proportional legal service oversight:

  1. Identifying potential regulatory risks
  2. Assessing the likelihood and impact of these risks
  3. Allocating resources based on risk levels
  4. Implementing targeted interventions

This method focuses efforts on high-risk areas, promoting efficiency and encouraging legal professionals to manage risks actively.

Legal Frameworks

Legal Services Act 2007

The Legal Services Act 2007 governs legal service regulation in England and Wales. Key provisions include:

  • Legal Services Board as oversight regulator
  • Definition of reserved legal activities
  • Creation of alternative business structures (ABS)
  • Office for Legal Complaints and the Legal Ombudsman

SRA Standards and Regulations

Effective since 25 November 2019, these regulations provide the framework for solicitors and law firms, including:

  • SRA Principles
  • SRA Code of Conduct for Solicitors, RELs and RFLs
  • SRA Code of Conduct for Firms
  • SRA Accounts Rules

These are concise, aligning with the risk-based regulation approach.

Reserved Legal Activities: Exclusive Services

Reserved legal activities are specific services only performed by authorized practitioners, defined by the Legal Services Act 2007:

1. Exercise of Rights of Audience

This includes the right to appear in court and address it. The level depends on the professional's qualification and status.

Example: A solicitor in a family law dispute must effectively present the case, following court procedures.

2. Conduct of Litigation

This involves managing legal proceedings, such as:

  • Issuing proceedings in any English and Welsh court
  • Managing prosecution and defense
  • Performing related functions

Example: A solicitor in a commercial litigation case must manage deadlines, negotiate settlements, and present evidence.

3. Reserved Instrument Activities

These relate to real estate and include:

  • Preparing instruments under the Land Registration Act 2002
  • Making registration applications or lodging documents
  • Preparing other estate-related instruments

Example: A solicitor drafting a will ensures it reflects the testator's intentions, avoids disputes, and complies with legal standards.

4. Probate Activities

This involves preparing probate papers for legal purposes.

Example: A solicitor managing probate proceedings ensures assets are distributed according to the will or intestacy rules.

5. Notarial Activities

These were traditionally carried out by notaries as per the Public Notaries Act 1801.

Example: A notary solicitor certifies a document for a client moving abroad, ensuring its validity.

6. Administration of Oaths

This involves the powers of commissioners for oaths under any legislation.

Example: A solicitor administers an oath to a witness, ensuring testimony is legally binding.

Application of Principles and Risk Regulation

Applying SRA principles and risk regulation to reserved legal activities involves:

Integrity and Public Trust

In litigation, solicitors must act with integrity:

  • Presenting arguments honestly
  • Disclosing all relevant information
  • Maintaining professional conduct

Independence and Conflicts of Interest

In activities like conveyancing, solicitors must maintain independence:

  • Managing client conflicts
  • Resisting undue influence
  • Providing impartial advice

Competence and Client Care

In probate, notarial activities, and oaths, solicitors must:

  • Stay updated on laws
  • Undertake training
  • Seek expert help when needed

Case Study: Applying Principles in Litigation

Consider a solicitor in a commercial dispute:

  1. Risk Identification: Risks include conflict of interest, limited expertise, and client pressure.

  2. Principles Application:

    • Integrity: The solicitor advises disclosure of all relevant information.
    • Independence: The solicitor resists unethical client pressure.
    • Competence: Consults a specialist when expertise is limited.

  3. Risk Mitigation:

    • Conducts thorough conflict checks
    • Undertakes additional training
    • Documents client advice, especially about disclosure

This illustrates the interaction of SRA principles and risk-based approaches in litigation.

Practical Applications and Compliance

Compliance requires:

  1. Robust Systems: Effective risk management, conflict checks, and monitoring.

  2. Continuous Development: Ethics training and regulatory updates.

  3. Client Communication: Clear explanations of services, limits, and ethics.

  4. Documentation: Comprehensive records of decisions and actions.

  5. Regular Audits: Internal audits to ensure compliance and improvement.

  6. Engagement with the Regulator: Open communication with the SRA, reporting breaches.

Conclusion

Comprehending SRA principles, risk regulation, and reserved activities is essential for SQE1 FLK1 exam success and future practice. These form the ethical and regulatory basis of legal services in England and Wales. Solicitors must practice ethically, competently, and in line with regulations. As legal practice changes, proactive risk management and ethical behavior remain key.