The introduction of multi-disciplinary practices and alternative business structures may lead to increased number of firms. This means increased competition for the same amount of work. The effect of this on the legal environment may be a reduction in work, fees, margins and availability in staff.

Change does not stop there: As part of the revisions to the solicitors code of conduct by the SRA, further changes are proposed to the Solicitors Accounts Rules which will take effect from October 2011.

Interest

The detailed and prescriptive interest provisions will be replaced by a requirement for the payment of a fair and reasonable amount of interest, when it is fair and reasonable to do so.

Firms will have to have a written policy on interest which is drawn to the attention of a client at the outset of a retainer. This requirement for a written policy is designed to protect the client’s position.

Electronic accounting practices and reporting

The rules have been updated to allow firms to obtain and retain electronic copies of bank statements, rather than having to rely on paper statements. The electronic signing of authorities for withdrawals from client account is to be permitted as long as there are ‘suitable safeguards’.

Reconciliations for certain passbook-operated accounts

The obligation for five weekly reconciliations has been extended to passbook-operated separate designated client accounts of solicitor-trustees, in place of the current 14 weekly requirement (rule 29(12)).

Compliance Officer for Finance and Administration

Under the draft Authorisation Rules, a new requirement has been introduced which details that in order to be granted authorisation, all firms will have to appoint a Compliance Officer for Legal Practice (who must be a lawyer) and a Compliance Officer for Finance and Administration whose responsibilities will include reporting breaches to the SRA.

Within the draft SRA Accounts Rules, the current duties in relation to compliance which have to be discharged by principals of the firm are extended to the Compliance Officer for Finance and Administration (COFA), whether or not the COFA is a principal in the practice.

These are only some of the changes. Full details of the proposed changes can be found in the draft SRA Accounts Rules 2011 on the Solicitors Regulation Authority website (www.sra.org.uk)

At Shah Kazemi & Co we are consulting with our clients to ensure they are prepared for the changes.