March Regulatory Update

James Price

Welcome to the March twenty twenty five Regulatory Update, where we discuss the latest developments in legal regulations, compliance, and professional responsibilities affecting law firms and solicitors. This update covers key areas including cryptocurrency guidance, the SRA Accounts Rules consultation, high-volume claims work, professional duties in litigation, and complaint handling by the Legal Ombudsman.

James Price

The Solicitors Regulation Authority has issued new guidance regarding the handling of cryptocurrency. The regulator has clarified that cryptocurrency is not considered client money and, therefore, cannot be held in a client account. While law firms are not prohibited from accepting cryptocurrency as payment, the SRA highlights its potential risks related to money laundering. Firms must ensure they uphold their duty to safeguard client assets when receiving cryptocurrency as payment.The definition of client money under the Solicitors Accounts Rules specifies that it must be held or received on behalf of the client. Since cryptocurrency is not classified as money, it does not fall within this definition. Firms accepting cryptocurrency must take additional precautions to manage these assets responsibly.

James Price

Moving onto the SRA account rules consultation, the SRA recently concluded three consultations on proposed changes to the Accounts Rules. The legal profession awaits further commentary and outcomes from the regulator.The Law Society has opposed the SRA’s proposals, offering alternative recommendations that they believe better support both the profession and the public interest. Notably, the Law Society has raised concerns about any potential removal of the client account, emphasising the risks such a move could pose to client protections.For those interested in staying informed, Datalaw will host a summer webinar on the SRA Accounts Rules, followed by a September webinar focusing on the role of the Reporting Accountant and the implications of the consultations.

James Price

Additionally, the SRA is conducting a major thematic review of high-volume claims handling, with over 60 ongoing firm inspections. Firms engaged in high-volume claims work should conduct internal reviews to ensure compliance with regulatory expectations. Key considerations include: Ensuring claims are being progressed appropriately, with clear documentation on each file. Providing clients with transparent cost information, including the proper use of any upfront payments. Maintaining effective communication through regular updates and clear advice regarding case progression and costs.Ensuring clients receive comprehensive advice about their case’s likelihood of success and, adhering to proper file closure procedures, including returning outstanding funds to clients and issuing clear final case updates. Datalaw’s twenty twenty four webinar, The SRA Code of Conduct Guide to Service and Competence, provides further insights into regulatory requirements for handling active matters.

James Price

The Legal Services Board has launched a consultation on professional ethical duties as implemented by legal services regulators. Recent criticisms regarding Strategic Lawsuits Against Public Participation and the use of Non-Disclosure Agreements have sparked debate over the effectiveness of existing ethical regulations.As the oversight regulator, the LSB is reviewing the standards set within the Codes of Conduct and legal education and training. The Solicitors Qualifying Examination currently assesses professional ethical standards pervasively, but this consultation may lead to changes in the way ethical competence is measured.

James Price

The Legal Ombudsman has released a report analysing its complaint-handling processes over the twenty twenty three/ twenty twenty four period. During this time, Legal Ombudsman accepted six thousand, six hundred and fifty two complaints, with 69% of investigated cases revealing poor service. The most common issue identified was inadequate communication, with a significant portion of complaints arising from a lack of updates and discussions with clients.To mitigate these risks, firms should: Regularly review their client communication strategies. Implement structured update letters for fee earners to use and ensure clients receive timely and clear updates regarding their cases. Datalaw’s upcoming webinar on Costs and Charging in Complaint Handling for colps and cofas will provide further insights into best practices for managing complaints and ensuring compliance with client service expectations.

James Price

This Regulatory Update highlights significant developments impacting legal practitioners, including cryptocurrency regulations, the SRA’s evolving Accounts Rules, high-volume claims work, professional ethical duties, and complaint handling. Law firms should stay informed and proactive in implementing best practices to ensure compliance and maintain high service standards.For further insights, consider attending the upcoming Datalaw webinars that delve into these regulatory changes in greater detail.