Legal Disciplinary Practices (LDP’s) FAQs

General

1. What is a Legal Disciplinary Practice (LDP)?

The Legal Services Act 2007 ( the 2007 Act) introduces new methods of practice for lawyers and people working in firms that supply legal services. An LDP is an example of one type of such a practice.

The 2007 also confers on the Solicitors Regulation Authority (SRA) the power to regulate LDPs that include up to 25% non-lawyer managers provided that they have at least one solicitor or registered European lawyer manager. Secondary legislation allowing LDPs came into force on 31^st March 2009.

The 2007 Act also confers power on the Council for Licensed Conveyancers (CLC) to regulate bodies that provide conveyancing services and other restricted legal services, where an authorised person of a kind qualified to provide such services is a manager, employee or owner of an interest in the body.

2. What is “Firm-based Regulation”?

Firm-based regulation is regulation of the business entity, as opposed to the individuals working within it. In order to be authorised to carry out legal work, both the individual and the firm must be regulated.

Legal executive sworking in LDPs will be regulated both as part of the business entity and as individuals. Regulation of LDP business entities will be carried out by the SRA, and will essentially deal with the services that the firm provides. This will necessarily involve a substantial degree of regulation of the individuals, including legal executives, providing services on behalf of the entity. However, residual regulation of individual legal executives will be by CILEX Regulation, the regulatory arm of CILEX. This will predominantly be concerned with the core rules of CILEX’s Code of Conduct that apply to all practising legal executives.

It will be possible for the SRA to take action against legal executive managers or employees of LDPs under its statutory powers. This could include, where necessary, issuing a fine or public rebuke to the legal executive. The SRA has the capacity to report any actions taken against, or intended to be taken against, legal executives to CILEX Regulation. Following such a report, CILEX Regulation may take further action against legal executives if it is appropriate and proportionate to do so.

3. Can I set up an LDP or is it only solicitors who can do this? Can a partnership consist of chartered legal executive lawyers only? If so, who will regulate it?

Chartered Legal Executive lawyers would be able to set up LDPs (subject to the requirements of question 1 above), along with solicitors and other people considered appropriate by the SRA. An LDP would have to notify the SRA of its membership and of other matters, and the LDP would first have to obtain a certificate of good standing in respect of lawyer members who are not solicitors and obtain specific approval of non-lawyer managers. The 2007 Act makes no provision for a partnership consisting of only legal executives lawyers.

4. Are there any restrictions on the type of work that I may do in an LDP?

Chartered Legal Executive lawyers would be able to undertake the ‘reserved activities’ that CILEX as a approved regulator is authorised to regulate under 2007 Act. Chartered Legal Executive lawyers can also carry out all activities that they currently undertake by virtue of being employed in a solicitors firm.

5. Do I need to undertake solicitors’ accounts training if I choose to become a partner in an LDP? Is there any other training that I need to undertake?

During the course of the SRA consultations, it was emphasised that compliance with the account rules is the equal responsibility of all partners in a firm. As such, it may be a responsibility of the firm to ensure appropriate training and competency levels relating to the account rules.

6. Will joining an LDP have any effect on my indemnity insurance?

Given that the Chartered Legal Executive lawyer will be acting as an employee or manager of the LDP, the situation regarding insurance will be the same as for employed Chartered Legal Executive lawyers working in solicitors’ firms. Chartered Legal Executive lawyers will therefore be insured under the firm’s insurance. Similarly, they will be covered by the SRA’s compensation fund. However, individual legal executives would be wise to confirm with the firm in which they are employed or seeking employment that the insurance arrangements are as set out above.

Regulation

7. Would I still be regulated by CILEX Regulation if I chose to work in an LDP? To what extent will I be regulated by the SRA?

CILEX Regulation will remain the primary regulator of legal executives, although the SRA will have powers of regulation against legal executives in SRA-regulated LDPs under the Legal Services Act. Under the Act, the SRA will regulate LDP firms as entities in themselves, and it will also have powers to regulate individuals working for the LDP, including Chartered Legal Executive lawyers. It will be possible, for instance, for the SRA to fine or publicly rebuke a legal executive where it concludes that a Chartered Legal Executive lawyer has breached the relevant rules, or to refer a matter to the Solicitors’ Disciplinary Tribunal or CILEX Regulation. This means that actions taken by the SRA could potentially include action against individual legal executives and/or to information being supplied to CILEX Regulation by the SRA about the conduct of legal executives where it is felt to be justified, potentially leading to disciplinary actions being taken by CILEX Regulation. Memoranda of understanding to cover the criteria and arrangements for the sharing of that information are currently being developed.

8. To whom should I pay my practising certificate fee if I join an LDP?

The practising certificate would still need to be paid to CILEX Regulation, as you would still be a practising Chartered Legal Executive lawyer. CILEX Regulation will remain the professional regulator of all legal executives.

9. If there are complaints about me whilst I am working in an LDP will it be CILEX Regulation or SRA that deals with them?

Complaints about the firm itself, mainly about the service it provides, would be dealt with by the SRA as the regulator of the entity. As explained in 11 above, this could involve investigation of the conduct of a legal executive and potentially disciplinary action by the SRA. Complaints about the legal executive as an individual, particularly about conduct not covered by the SRA rules, and all serious complaints which might lead to suspension or disbarment, would be covered by CILEX Regulation as the individual regulator of the legal executive. These arrangements will be covered by the memoranda of understanding referred to in the answer to question 11.

The future

10. Will CILEX Regulation become a regulator of LDPs?

There is no provision in the 2007 Act to allow CILEX’s regulatory arm to become a regulator of LDPs. However, see below for other forms of practices.

11. I have also heard mention of multi-disciplinary practices and Alternative Business Structures. What are they and will legal executives be able to work in them?

Multi-disciplinary practices (MDPs) are partnerships involving lawyers and other professionals such as accountants or architects. These will involve the provision of legal and other services. Alternative Business Structures (ABSs) will allow lawyers to form multi-disciplinary practices with non-lawyers, permitting them to offer legal as well as non-legal services. Under the full ABS regime non-lawyers, including commercial organisations, will be allowed to own firms that provide legal services. It is anticipated that these will be the last of the new business structures to be implemented, around 2011 or 2012.

The opportunity exists for these new business structures to be regulated by the approved regulators, which could enable CILEX Regulation to regulate MDPs and ABSs. Again CILEX will need to decide whether or not to seek the powers which CILEX Regulation would need to regulate such entities.

12. What role will the Legal Services Board play in the regulation of the legal profession?

The Legal Services Board will oversee the role of regulators in providing legal services. It will not directly regulate firms, but will ensure that regulation is carried out properly by the approved bodies.

The Chair, Chief Executive and Board of the LSB have now been appointed. More information on how the LSB will operate will be provided in due course.