0203 911 9710

info@thestrategicpartner.co.uk

Latest News

Owning a Separate Business – Update and Guidance
May 11, 2022

 1. Introduction

It is not unusual for some solicitors to own separate businesses that provide linked professional services to their clients. The regulator has recently updated their guidance explaining the obligations for all SRA regulated firms, their managers, owners and employees under the SRA codes and principles when you are linked with a separate business.

 

 2. What does a Separate Business mean?

Within the SRA Glossary, a ‘separate business’ means where you are an authorised body or own, manage or are employed any an authorised body, a separate business:

  • which you own;
  • which you are owned by;
  • where you actively participate in the provision of its services, including where you have any direct control over the business or any indirect control over the business through another person, or
  • which you are connected with,

And which is not an authorised body, an authorised non-SRA firm, or an overseas practice.

 

 2.1 Examples of situations involving separate business include:

  • A solicitor in a recognised body that has shares in a company that produces medical reports in personal injury cases
  • A recognised body that owns a separate company that provides online legal services and is not authorised
  • A solicitor who practises in a recognised body but who also works on their own account as a “freelance solicitor” without being authorised as a recognised sole practice

 

 3. How does the Separate Business regulation affect me?

The SRA updated its guidance in an announcement published on 8th March 2022 and covers various issues such as:

  • the information requirements appropriate to clients of an unauthorised business and obtaining a client’s informed consent
  • Examples of situations involving separate business
  • Conflicts of interest and confidentiality involving separate businesses
  • Dividing or allowing a matter to be divided
  • SRA Accounts rules

 

 3.1 Within the guidance, the SRA stresses that they do not regulate separate businesses, however, it makes clear that under the obligations:

  • Paragraphs 5.3 of the Code of Conduct for Solicitors, RELs and RFLs and 7.1(b) of the Code of Conduct for Firms contain obligations that apply when clients are referred, recommended or introduced to a separate business or their matter is divided between the authorised body and the separate business.
  • Action by the separate business may lead to a linked authorised body or individual being in breach of SRA Principles especially where they have an element of control over the separate business or actively participate in it.

 

To read it in full, you can access the information here: Separate Business Guidance

 

4. Our Services

At The Strategic Partner, we provide law firms with a range of services to assist in managing their business.

Our detailed firm review is an intensive piece of consultancy where we spend the necessary time with a law firm to understand how the firm operates and, through doing so, assess where a firm can make improvements or changes, resulting in improved efficiency, increased profitability and improved service, whilst ensuring all regulatory obligations are being met.

Risk Regulation & compliance Service including AML  – Our Risk, Regulation and Compliance Service (including AML) has been designed to provide law firms of all sizes with a compliant environment. We provide you with policies and procedures that are bespoke to how your firm works, whilst drawing your attention to any gaps in your risk and compliance activities.

We work with firms of all sizes and types, from partnerships to ABSs, high street firms, and multinational firms. Each firm is different, and whilst there is a commonality of regulation and expected standards, it is essential to recognise how a firm implements compliance to tailor the solution to each firm’s working practices.

Our Risk, Compliance, AML Guidance and Register Administration Service provides law firms with a cost-effective solution to outsource the upkeep of the firm’s registers and to provide compliance guidance to the staff. Our service releases the Compliance Officers from some of the day-to-day burdens of keeping up with the regulatory requirements.

For more information about The Strategic Partner or any of our services, you can call us on 02039119710, you can email us info@thestrategicpartner.co.uk or visit our website to make an online enquiry here.

 

You can view and download the PDF of this article here.

Related Articles