A package of reforms created to provide law firms and solicitors with greater flexibility was finalised by the Solicitors Regulation Authority (SRA) last week.
The proposals from the regulator include the creation of separate Codes of Conduct for firms and solicitors, improving price and service transparency, enabling solicitors to work on a freelance basis as well as reductions to the level of mandatory professional indemnity insurance.
Earlier this week, a full response to the suggested measures was released by the Institute of Legacy Management (ILM).
A membership body for legacy professionals, the ILM has voiced its concern over the implications of some of the plans, particularly over the reduced level of cover and the resulting impact on charities.
In this article, the ILM’s Training Manager, Nichola Sims, highlights the key concerns for members in relation to the proposals, as well as the changes that the organisation would most like to see.
What are the key objectives of the Institute of Legacy Management?
The overriding objective of the Institute is to ensure that every generous donor’s final wishes achieve their greatest potential.
We do this by providing training services and a network of support to those engaged in charity legacy administration. We also work to be an effective and respected voice for the legacy sector.
Since our formation in 1999 therefore, we have sought to educate and train those involved in legacy management, to promote professional standards, to provide consultancy and support, to represent the views of the profession and to act as a lobby group where appropriate.
The Solicitors Regulation Authority set out further details on its proposals for change last week. Where your members are concerned, which changes, in particular, were of particular importance?
The main concerns for our members were twofold, both in terms of the proposed PII and compensation fund changes:
- The proposed narrowing of the eligibility of “those…that need and deserve the most protection”
- The proposed reduced cover of only £500,000
As stated in our response, we believe charities have been misaligned with other large business clients. Whilst charities raise large amounts of money, these are immediately spent in accordance with their charitable objectives and charity law and not generating dividends for shareholders. By their very nature, many charities exist to help “those…that need and deserve the most protection” and penalising charities in this way could have a disastrous effect on those the SRA are trying to assist.
Additionally, we strongly disagree that the proposed changes to PII requirements are appropriate given that many estates, whether charitable in nature or not, exceed £500,000 and any additional loss over this amount would not be covered whether for charities or family or friends of the deceased. The SRA Consultation states that 98% of estates are currently covered by the £500,000 limit, but this percentage is likely to reduce as estate values and the number of people leaving gifts in wills both rise. If more and more estates with claims against them are valued at over £500,000, less and less consumers will have access to appropriate protection and redress.
This would only be exacerbated by their proposal to assess maximum payment based on the number of clients instructing the same solicitor.
Having engaged with some of your members over the changes, were there any repeated concerns?
Given our members range from small local organisations to national charities, the potential negative impact of the proposals could be felt across the board and not limited to only household names.
In terms of the organisation, do the remit of your concerns extend further than those of your members?
We believe that our concerns cover both lay and charity beneficiaries of estates – the proposed reduced PII requirement does not appear to discriminate against the type of client, favouring reduced payments for the solicitor over protection for the consumer.
Likewise, the proposed approach for assessing when a maximum payment has been reached clearly jeopardises those consumers working together with the same legal provider – an approach which seems at odds with the overriding benefit of parties sharing the same interests instructing the same legal representative to reduce costs and time spent on an issue.
Were there any particular proposals that you were in favour of or agreed with to an extent?
We agree with the premise that efforts should be made to reduce the number of people unable to access legal representation due to costs.
Unfortunately, we do not feel that the measures currently suggested would guarantee benefit for anyone other than legal representatives, given that there is no requirement for the savings made by the proposed reduced contributions to be passed onto the consumer.
If the organisation could suggest one change for the SRA to make, what would it be?
At a very basic level, it would seem only fair that any changes made to make legal representation more readily available should benefit the stated intended beneficiaries. Our suggested change would, therefore, be that any reduction in overheads, made by these or other proposals, should be required to be passed onto the consumer and not left to the business ethics of the solicitor or firm in question.
