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Law Society questions plan to allow local authority solicitors to charge charities

The Law Society has questioned the decision by the Solicitors Regulation Authority to include – as part of its ‘red tape initiative’ – a proposal to allow local authority solicitors to charge charities for legal services.

Chancery Lane insisted that the proposal, which would require amendments to the Practice Framework Rules, should be “significantly limited”, with “consideration given to the precise terms of its provisions”.

In its current form, Rule 4.15 (a) 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’s proposal would see the rule liberalised to a degree, with local government solicitors allowed to charge charities “whose objects relate wholly or partly” to the local authority’s area. 

Local government lawyers, who have long called for changes to the rules, welcomed the proposal in part, but were critical of the geographical restriction – saying that the SRA had not gone far enough.

Their campaign has been given added impetus in recent years by the huge growth in the number of schools converting to academies, which enjoy charitable status. 

Justifying the inclusion of the proposal in its list on the grounds of the significant changes taking place in local government, the watchdog said the rule as it currently stands was 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 had been identified, it said.

The SRA added: “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 Law Society said in its response: “We question why such a proposal is included in a ‘red tape’ exercise and are firmly of the view that this should be considered in the wider context of a review of in-house practice.”

Chancery Lane urged the SRA to consider any policy change of this nature in the context of the planned comprehensive review of in-house practice.

“This proposal represents a change in policy and presents the risk that an ad hoc policy decision will result in an inconsistent and incoherent regulatory framework,” it added.

The Law Society said it did not view the specific example provided on schools/academies as problematic, but warned that there were “far wider implications to an amendment of this sort”.

The submission from Chancery Lane said: “It seems that local government in-house solicitors will be able to compete with private practitioners, without entity regulation, in areas where previously this would not have been possible.

“This suggests that local government in-house solicitors will be at an advantage to firms in private practice, who have higher regulatory costs and burdens; it is unclear why this should be the case. Such services could of course be provided if the organisation in which the solicitors worked were to become an ABS [alternative business structure].”

A spokesman for the Law Society said that, overall, it welcomed both the intention behind the SRA’s red tape initiative and the authority’s “firm and ongoing commitment to reviewing/simplifying its regulations and processes”.

He added: “As always, different parts of our membership would have differing views or would place their emphasis on different aspects of our response. Nevertheless we have some concerns about what has been classified as ‘red tape’.”

In addition to questioning the proposal to allow local government solicitors to charge charities, Chancery Lane raised concerns about the plan to remove restrictions on charging by in-house lawyers employed in not-for-profit organisations.

Philip Hoult