Firm-based regulation

The following Practice Compliance practice note provides comprehensive and up to date legal information covering:

  • Firm-based regulation
  • What is firm-based regulation?
  • Firm-based regulation in practice
  • Authorisation
  • Supervision
  • Enforcement
  • Responsibility for compliance

Firm-based regulation

Historically, only individuals were subject to professional rules and requirements rather than the entities through which they practised. Since March 2009, the Solicitors Regulation Authority (SRA) has regulated both individuals (solicitors, registered European lawyers, and registered foreign lawyers) and firms (including partnerships, limited liability partnerships (LLPs), companies and sole practitioners). This Practice Note explains the concept of firm-based regulation under which entities are regulated by the SRA.

What is firm-based regulation?

The vast majority of firms operate via some sort of business entity, eg:

  1. partnership

  2. LLP

  3. company

The sole practitioner (ie sole trader) business model is the obvious exception.

If a firm provides reserved legal activity services, it must generally be authorised by one of the legal services regulators. If a firm does not provide reserved legal activity services, it may not need to be authorised, but can, subject to complying with the SRA’s eligibility requirements, choose to bring itself within SRA regulation. If a firm provides immigration, claims management or financial services, it will need to be authorised, but this could be by the applicable sector-specific regulator (ie Office of the Immigration Services Commissioner or Financial Conduct Authority) rather than the SRA.

Not all legal services regulators can regulate all types of legal services—see Practice Note: Legal Services Board—Statutory role.

The reserved activities are set out in the Legal Services Act 2007. They are:

  1. the exercise of a

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