SRA Handbook

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Version 3 of the Handbook was published on 20/04/2012. For more information, please click 'History' Above

Part 4: Compliance with practice requirements

Rule 19: Compliance with practice requirements

19.1

An authorised body and its managers and employees must at all times ensure that they act in accordance with the requirements of the SRA's regulatory arrangements as they apply to them.

19.2

A solicitor, REL or RFL who is a member or shareowner of an authorised body which is a company must not cause, instigate or connive at any breach of the requirements imposed under the SRA's regulatory arrangements by the authorised body or any of its managers or employees.

19.3

An employee of an authorised body must not cause, instigate or connive at any breach of any requirements imposed under the SRA's regulatory arrangements.

19.4

The partners in an authorised body which is a partnership are responsible not only as managers but also, jointly and severally, as the authorised body.

Rule 20: Overseas practice

20.1

Subject to Rule 20.2 to 20.4, the requirements in these rules apply to the overseas practice of a solicitor, REL, RFL or authorised body.

20.2

The rules in Part 2 and Rules 17.2, 18.4, 19 and 21 apply to your overseas practice as:

(a)

a manager of an authorised body, if you are a lawyer of England and Wales or an individual non-lawyer;

(b)

a member or shareowner of an authorised body which is a company, if you are a solicitor or (in relation to practice from an office in Scotland or Northern Ireland) an REL,

except that Rule 19 applies only to the extent that it applies to the authorised body, manager or employee by virtue of these rules or Chapter 13 (Application and waivers provisions) of the SRA Code of Conduct.

20.3

If you are a solicitor or an REL you are not required to comply with Rule 13 or Rule 14, as appropriate, in order to practise through a firm which has no office in England and Wales, but you must comply with Rule 1 and Rule 2.

20.4

If compliance with any applicable provision of these rules would result in your breaching local law, you may disregard that provision to the extent necessary to comply with that local law.

Rule 21: Waivers

21.1

Subject to provisions relating to any statutory obligations or the SRA's regulatory arrangements affecting its ability to waive any requirements, the SRA Board shall have power to waive in writing the provisions of these rules for a particular purpose or purposes expressed in such waiver, and to attach conditions to or revoke such waiver, at its own discretion.

Guidance note

(i)

An applicant for a waiver must satisfy the SRA that the circumstances are sufficiently exceptional to justify a departure from the requirements of the rule in question, bearing in mind its purpose. Applications should be made to the Professional Ethics Guidance Team.

Rule 22: Transitional provisions and grace period

22.1

From 31 March 2012 or the date on which an order made pursuant to section 69 of the LSA relating to the status of sole practitioners comes into force, whichever is the later, these rules shall have effect subject to the following amendments:

(a)

Rules 1.1(a), 2.1(a), 3.1(a), 8.7, 11.1(c)(i) and 12.1(a) shall be omitted;

(b)

In Rules 1.1(b) and 2.1(b) the words, "authorised as a sole practitioner" shall be substituted for the words "a recognised sole practitioner";

(c)

In Rules 1.2(a) and 2.2(a) the words "as a recognised body" shall be substituted for the words "a recognised sole practitioner";

(d)

In Rule 3.2(d) the words "a recognised sole practitioner," shall be omitted;

(e)

In Rules 5.1(d) and 5.2(c) the words "or by a recognised sole practitioner" shall be omitted;

(f)

In Rules 6.1 and 7.1 the words "or an employee of a recognised sole practitioner" shall be omitted;

(g)

In Rule 10.1(a) the word "recognised" shall be omitted and the words "by endorsing your practising certificate or certificate of registration to that effect" shall be omitted;

(h)

In Rules 10.1(b) and 10.2 the words "authorised as a" shall be substituted for the words "a recognised";

(i)

In Rule 12.1(b), the words "a lawyer manager" shall be substituted for the words "one of the lawyer managers"; and

(j)

Rule 13.1 shall have effect as if the words "sole practitioner," were inserted after the words "namely a".

22.2

Unless the context otherwise requires, references in these rules to:

(a)

these rules, or a provision of these rules; and

(b)

the SRA Code of Conduct, rules, regulations or regulatory arrangements, or a provision of the same,

include a reference to the equivalent rules, regulations or provisions previously in force.

22.3

A body that has, at the time these rules come into force, been recognised by the SRA under section 9 AJA and that does not comply with Rule 13.1(b) above shall continue to be treated as a legal services body for the purposes of these rules and the SRA's regulatory arrangements until:

(a)

such time as it ceases to comply with the management and control requirements set out in Rule 22.4 below; or

(b)

the end of the transitional period under Part 2 of Schedule 5 to the LSA, or such earlier time as the body may elect,

at which time it shall be a licensed body for the purposes of these rules and the SRA's regulatory arrangements.

22.4

The management and control requirements referred to in Rule 22.3 above are:

(a)

At least 75% of the body's managers must be:

(i)

individuals who are, and are entitled to practise as, lawyers of England and Wales, lawyers of Establishment Directive professions or RFLs; or

(ii)

bodies corporate which are legally qualified bodies;

although a legally qualified body cannot be a director of a body which is a company;

(b)

Individuals who are, and are entitled to practise as, lawyers of England and Wales, lawyers of Establishment Directive professions or RFLs must make up at least 75% of the ultimate beneficial ownership of the body; and

(c)

Individuals who are, and are entitled to practise as, lawyers of England and Wales, lawyers of Establishment Directive professions or RFLs, and/or legally qualified bodies, must:

(i)

exercise or control the exercise of at least 75% of the voting rights in the body; and

(ii)

if the body is a company with shares, hold (as registered members of the company) at least 75% of the shares.

(d)

Subject to Rule 13.1(b) above, every interest holderowner of the recognised body, and every person who exercises or controls the exercise of any voting rights in the body, must be:

(i)

an individual who is, and is entitled to practise as, a lawyer of England and Wales, a lawyer of an Establishment Directive profession or an RFL;

(ii)

a legally qualified body; or

(iii)

an individual who is approved under regulation 3 of the SRA Recognised Bodies Regulations 2009, regulation 5 of the SRA Recognised Bodies Regulations 2011 or Part 4 of the SRA Authorisation Rules and, subject to (e) below, is a manager of the body.

(e)

An individual who is not entitled under (d)(i) above may be an interest holderowner of a recognised body without being a manager of the body if:

(i)

the recognised body is a company which is wholly or partly owned by a partnership or LLP which is a legally qualified body;

(ii)

the individual is approved under regulation 3 of the SRA Recognised Bodies Regulations 2009, regulation 5 of the SRA Recognised Bodies Regulations 2011 or Part 4 of the SRA Authorisation Rulesand is a manager of the partnership or LLP; and

(iii)

the individual is precluded under the partnership agreement or members' agreement from exercising or authorising any vote in relation to the company.

For the purposes of Rule 22.4 and for the purposes of section 9A(6)(h) and (6C) of the AJA "legally qualified body" means a body which would meet the services requirement in Rule 13.2 and is:

(A)

a recognised body ;

(B)

an authorised non-SRA firm of which individuals who are, and are entitled to practise as, lawyers of England and Wales , lawyers of Establishment Directive professions or RFLs make up at least 75% of the ultimate beneficial ownership; or

(C)

a European corporate practice which is a lawyers' practice and is a body incorporated in an Establishment Directive state , or a partnership with separate legal identity formed under the law of an Establishment Directive state :

(I)

which has an office in an Establishment Directive state but does not have an office in England and Wales;

(II)

whose ultimate beneficial owners include at least one individual who is not a lawyer of England and Wales but is, and is entitled to practise as, a lawyer of an Establishment Directive profession ;

(III)

whose managers include at least one such individual, or at least one body corporate whose managers include at least one such individual;

(IV)

75% of whose ultimate beneficial ownership is in the hands of individuals who are, and are entitled to practise as, lawyers of Establishment Directive professions , lawyers of England and Wales , and/or RFLs ; and

(V)

75% of whose managers comprise such individuals, and/or bodies corporate 75% of whose managers comprise such individuals.

22.5

These rules shall not apply to licensable bodies until such time as the Society is designated as a licensing authority under Part 1 of Schedule 10 to the LSA and all definitions shall be construed accordingly.

22.6

In these rules references:

(a)

in the preamble to the rules being made under section 83 and Schedule 11 to the Legal Services Act 2007;

(b)

to COLPs and COFAs; and

(c)

to the approval of managers, owners, COLPs and COFAs;

shall have no effect until such time as the Society is designated as a licensing authority under Part 1 of Schedule 10 to the LSA.

22.7

Until the 180th day after the date on which the Society is designated as a licensing authority under Part 1 of Schedule 10 to the LSA:

(a)

Rule 4.12(a) shall have no effect;

(b)

Rule 4.13 (insurers) shall have no effect;

(c)

Rule 13.06 (insurers) of the Solicitors' Code of Conduct 2007 shall continue to have effect; and

(d)

references to Rule 4.13 shall be treated as references to Rule 13.06 of the Solicitors' Code of Conduct 2007.