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SRA board approves rule change allowing charging of charities

The board of the Solicitors Regulation Authority has approved a change to the Practice Framework Rules that will allow local government solicitors to charge charities for legal services.

The proposal was one of ten rule changes to be examined at a specially convened meeting of the SRA Board today (27 February) as part of the regulator’s ‘red tape initiative’. All ten amendments were approved and will now go before the Legal Services Board.

The Law Society had criticised the plan, claiming it would place local government solicitors at an advantage over private practice. 

The move requires amendment to rule 4.15 (e) of the Practice Framework Rules, which currently states that local government solicitors can act for a charity or voluntary organisation provided that there is no charge to the charity or voluntary organisation.

The rule is to be changed to allow local government solicitors to charge charities “whose objects relate wholly or partly” to their employer council’s area. 

The SRA said a suggestion that this geographical restriction should be removed will be considered at a later date as part of the wider review of the regulation of in-house legal practice. 

However, it added: "In our assessment this suggestion may increase risk as local authorities would be allowed to provide legal services on effectively a commercial basis, without the public protections attached to entity regulation, for clients with whom the local authority has no connection."

A paper prepared for the meeting of the SRA Board said: “Discussions between the SRA and local authorities have identified that new challenges are being presented as a result of changes in the structure of local government departments and how these departments provide services.

“By way of example, local government departments can at present provide legal services to schools in respect of contentious and non-contentious matters, however, a number of schools have applied for academy status, which means a charity status. Current regulations do not allow solicitors employed by local authorities to charge charities for services delivered, while in the same time the budget for the academy is removed from the local authority.”

The paper said an amendment of the rule, as proposed, would allow for solicitors employed by local authorities to charge for and continue to provide specialist legal services to charitable organisations.

It added that the change would allow local government to continue to provide specialist legal services to charities in areas such as education law, child exclusions, special educational needs, parental access to records, and compliance with data protection law on both a contentious and non-contentious basis.

On the proposal’s impacts, risks, and benefits, the board paper said: “There are potential equality and access to justice issues which have been identified during this consultation, namely charities who have relied on ‘free’ advice from local authorities may now find themselves unable to seek advice in respect of their affairs due to lack of resources. However, the rule change will not compel local authorities to charge for any such services but merely enable them to do so. Therefore we consider the likelihood of any negative impact to be slight.”

The authors of the paper added that maintaining the current provisions, in their view, was not consistent with the principles of better regulation in that it did not identify any regulatory risk which was not addressed in another regulatory provision.

“This is evidenced by the strong response received from interested parties,” the board paper said. “Benefits of the change will allow local authority solicitors to deliver services in a way which is in the public interest. We therefore recommend that the Board make this amendment.”

The recommendation before the board was to make the amendments to the Code and the Glossary for all ten proposals in the red tape initiative, subject to the LSB's approval.

The SRA consultation on all ten red tape initiative proposals attracted 93 responses, 56 of which came from individuals at Kent County Council – primarily in relation to the change affecting local government.

In its response, the Law Society questioned the SRA’s proposal on rule 4.15, arguing that any liberalisation should be significantly limited and with consideration given to the precise terms of its provisions.

Chancery Lane's claim that the move would place local government solicitors at an advantage to private practice firms was heavily criticised as “protectionist” by the Association of Council Secretaries and Solicitors, Law Society Council member for Solicitors in Local Government Maria Memoli, and Kent County Council Director of Governance and Law Geoff Wild.

They welcomed the SRA’s move, although they argued that the geographical restriction was unnecessary and ran counter to the trend in local government to move towards cross border provision.

Following the board meeting, the SRA said the red tape initiative would be an ongoing project. Future areas for consideration include: online PC renewals exercise; reporting requirements; amendments to education and training regulations; simplifying the structure of regulations; and improvements to operational administration.

Philip Hoult