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SRA to relax restrictions on local authority solicitors charging charities

The Solicitors Regulation Authority is proposing to allow local authority solicitors to charge charities – including academies – for legal services as part of its ‘Red Tape Initiative’.

However, the SRA’s plan to restrict this to acting for charities “whose objects relate wholly or partly” to the local authority’s area has been sharply criticised.

Local government lawyers have long campaigned for a change to Rule 4.15 (e) of the Practice Framework Rules, and have previously had to rely on waivers.

This campaign was given added impetus by the huge growth in the number of schools converting to academies.

Rule 4.15 permits a solicitor employed in local government to act for another organisation or person to which or to whom the employer is statutorily empowered to provide legal services, subject to the conditions, if relevant, specified in (b) to (g) of that rule.

Condition (e) prohibits charging a charity for non-contentious work and in relation to contentious work, requires the employer to indemnify the charity in relation to the solicitor's costs in so far as they are not recoverable from any other source.

The SRA consultation paper acknowledged that local government was undergoing significant change. It said: “In particular, services and organisations that have traditionally been a part of the local authority are being transformed into stand alone entities; often charities. This is particularly the case for schools leaving local authority control to become academies.

“In addition, local authority departments are being required to manage within tight budgets and, therefore, the ability of council legal departments to provide services to such bodies without, at least, covering their overheads, is severely limited.”

The regulator said that amending the provision would mean councils could continue to provide specialist legal services to academies in areas such as education law, child exclusions, special educational needs, parental access to school records, and compliance with data protection law on both a non-contentious and contentious basis.

Local authorities would also be able to continue to provide services to other charities and charge for those services, which the SRA said would provide flexibility.

The paper added: “Having considered the value of maintaining this Rule we are proposing to amend it as it is not consistent with the principles of better regulation in that it does not address any identifiable regulatory risk that is not addressed by other regulatory provisions. No downside risks have been identified.

“If no change is made to this rule there is a risk that local authority solicitors will be prevented from delivering services in a way which is in the public interest unless waivers are granted. That process incurs time delay and cost and lacks certainty and transparency.”

However, the revised wording for Rule 4.15 (e) would only allow local authority solicitors to act “for a charity or voluntary organisation whose objects relate wholly or partly to the employer’s area”.

Geoff Wild, Director of Governance & Law at Kent County Council, has – along with other local government lawyers – been pressing the SRA to change the current restrictions, which he described as “outdated and unfair”.

In his response to the consultation, Wild urged the SRA to go “a vital step further” and remove the geographical restriction in the rule.

He added: “There is absolutely no logical, rational, legal, ethical or other reason why a local government lawyer should be limited to working only for charity or voluntary organisations whose objects relate to their area.

“For example, this would prevent us from working for academies in other local authority areas, which amounts to an unjustified restraint on our ability to exercise our statutory powers to charge and trade where our services are already in much demand.

“To continue with this unnecessary and unfounded restriction will amount to an unjustified restraint on our ability to exercise our statutory powers to charge and trade and effectively prevent us operating on a level playing field to others in our profession.”

Wild said that “especially in this day and age, the choice and provision of legal services should not be governed by geographical proximity”. He added that it would unnecessarily prevent local authority lawyers from working with charities nationally or in other parts of the country.

He told Local Government Lawyer: “All credit to them [the SRA]  for doing so under their ‘Red Tape Initiative’, but it clearly doesn't go far enough and displays a woeful lack of understanding of the dilemmas facing local government lawyers at the present time, especially when wanting to continue to work for schools that have converted to academies (and, in the process, become charities).”

Responding to the consultation in his own right as an in-house lawyer employed by Surrey County Council, Allan Wells also said he was fully supportive of the proposal to remove the current restrictions on local authorities being able to charge for work done for charities.

He wrote: “We have obtained a waiver in this authority that enables us to do work for academies that were once our schools (and for which we charged) and who had wanted us to continue to provide a service for them.”

However, like Kent's Wild, Wells also criticised the geographical restriction contained in the current draft, suggesting that it created ambiguity.

“Local authorities are empowered by the Local Authority (Goods and Services Act ) 1970 to do work e.g. for schools, academies, and other charities in other parts of the country – not just in their own area,” he pointed out.

Wells added that paragraph [4.15 (a)] of the regulations made it clear that local authority solicitors can only act for other persons if they are statutorily empowered to do so.

He argued: “I would suggest that [4.15 (e)] needs removing completely so as to remove any doubt that in-house lawyers can provide services to those charities falling outside their area. There can be surely be no policy reason for preventing us doing this work if it is permitted by statute.”

The SRA’s Red Tape Initiative, which mirrors government initiatives, seeks to remove any unnecessary burdens on those who it regulates.

Other measures put forward by the SRA include removing restrictions on charging by in-house lawyers employed in not-for-profit organisations and the need for SRA approval for trainee secondments.

More information on the consultation can be found here. The SRA said it planned to start making changes to the regulatory framework from April 2013.

The SRA consultation paper also acknowledged that as part of its wider review of its approach to regulating in-house solicitors, it would need during the course of 2013 to address the changing structure of local authority provision.

Philip Hoult