However, the Solicitors Regulation Authority (SRA) has revealed that, as of 29 January 2013, 145 law firms are now facing enforcement action for failing to complete their COLP and COFA nominations and failing to co-operate with the SRA.

The SRA requires all law firms, including alternative business structures, to appoint a COLP and a COFA as part of its strategy to improve regulation and ensure public confidence in legal services. It is hoped that COLPs and COFAs will help build a culture of compliance within their firms, ensuring that there are appropriate systems and controls in place to comply with the SRA’s regulatory requirements.

The SRA has also revealed that 1,200 COLP/COFA nominees did not declare “potentially relevant” information on their application forms, such as undisclosed criminal convictions, serious disciplinary sanctions and undeclared bankruptcy. The SRA now plans to pursue these applicants, even when their firms eventually had their compliance officers approved. Sanctions could include a warning or a rebuke, but offenders could potentially receive a fine of up to £2,000 or a referral to the Solicitors Disciplinary Tribunal and have their licences removed.

The SRA will shortly be communicating with COLPs and COFAs to let them know about the processes being put in place to facilitate engagement between the SRA and COLPs/COFAs.

From 1 February 2013, the following changes now apply:

1. The time limits for accepting a complaint has increased from twelve months to six years from the date of act/omission, or three years from when the complainant should have known about the complaint. This new limit is being introduced gradually and the LeO will not accept complaints where the act or date of awareness go beyond 6 October 2010;

2. The maximum compensation award has increased from £30,000 to £50,000;

3. The LeO can accept complaints from prospective clients who could reasonably have expected to receive a service or were unreasonably offered a service they did not want (e.g. where a law firm continues to make unsolicited phone calls despite being asked to stop.)

From 1 April 2013, all complaints investigated by the LeO will incur a £400 case fee; however, law firms which handle the complaint reasonably may be eligible for a case fee waiver.

The LeO has said that it does not believe the changes will “substantially add” to the 75,000 to 80,000 enquiries it receives every year, but said that they would probably increase the number of eligible complaints by 10 per cent a year.

The changes were made, in part, to make the LeO better equipped to deal with alternative business structures (ABSs), with the LeO stating that the introduction and growth of ABSs had meant that the legal sector was now “becoming increasingly commoditised” and marketing techniques “becoming more competitive”.

The SRA requires all law firms, including alternative business structures, to appoint a COLP and a COFA as part of its strategy to improve regulation and ensure public confidence in legal services. It is hoped that COLPs and COFAs will help build a culture of compliance within their firms, ensuring that there are appropriate systems and controls in place to comply with the SRA’s regulatory requirements. COLPs and COFAs will begin their duties from 1 January 2013.

However, despite the nomination process beginning in May 2012, the SRA has reported that approximately four hundred firms have still not made their appointments, despite the final deadline passing. The SRA is now in the process of sending out ‘explanation with warning’ letters to those firms that have not satisfactorily explained why there is no record of their completed nominations.

All COLPs and COFAs need to be approved by 31 December 2012 and any firm that does not have individuals in place and approved by the SRA by that time will be in breach of regulations and are likely to face regulatory sanctions, such as reprimands, fines or even the revocation of the firm’s licence.

As the formal deadline for COLPs and COFAs to take office approaches, many companies are trying to sell packages/training material to assist nominated COLPs and COFAs in their new compliance roles. Just be aware of this and research well into what you are buying and whether it will really help you achieve compliance under the Code.

The SRA has approved new rules for the Compensation Fund, which is paid for by fees from solicitors and law firms, after Parliament agreed to remove a ‘sunset’ clause in the Legal Services Act that would have excluded ABSs at the end of 2012.

In a consultation earlier this year, the Law Society argued that the appropriateness of a single fund covering both types of law firm should be reviewed within two years. The Law Society is concerned that ABS firms may give rise to different risks to those that are generally associated with more traditional law firms, and is worried that the current compensation regime may not be appropriate for ABSs.

The SRA has indicated that it will be reviewing compensation arrangements over the next two years, perhaps in 2014.

In a statement, the Law Society said that this forthcoming review of the Compensation Fund should include (1) a consideration of the impact of ABS claims (with data recorded on the types of claims made and the type of entity that generates the most claims); (2) an assessment of whether a single compensation fund is appropriate to cover non-solicitor principals and regulated activities that could include work outside the scope of traditional legal activities; and (3) a consideration of the impact of the SRA’s decision to transfer the cover for non-applied firms, previously provided by the assigned risks pool, to the Compensation Fund, which the Law Society says has exposed the Fund to a new type of claim relating to negligent acts.

It should also be noted that levies to the Compensation Fund increased quite considerably earlier this year, from £60 to £92 for individuals and from £772 to £1,340 for law firms.

Back in May 2012, the SRA had asked the MoJ to raise the maximum fine it can impose on law firms from £2,000 to £250m – the threshold that applies to alternative business structures (ABSs). However, the MoJ said that it did “not consider a strong enough case has been made to change the current fining powers by such a large amount.”

The SRA, in response, rejected arguments (which the Law Society amongst others had made) that an increase in its fining powers was not necessary because the Solicitors Disciplinary Tribunal (SDT) could already impose unlimited fines for breaches of its rules, stating that, in some cases, a breach may be serious enough to deserve a financial punishment of more than £2,000, but not so serious as to justify a suspension or strike-off. However, the SRA’s average costs in bringing an SDT case are approximately £8,000, which, added to the current maximum fine of £2,000, can result in law firms facing a total bill of £10,000. An SRA spokesman said that “If matters were dealt with in-house, then we could be quicker than the SDT and save firms the additional costs of having matters heard by the tribunal.”

The MoJ has not ruled out other changes in the fining regime, so we will have to wait to see if anything else transpires.

The ‘Red Tape Challenge’ is a website-based project aimed at identifying – and scrapping – unnecessary regulations. Since April 2011, the Government has been asking interested parties in specific sector areas to suggest which regulations should be scrapped, merged with other regulations, simplified, or improved.

The SRA is now following suit, or at least doing something similar!

SRA chairman Charles Plant said that the initiative aims to ensure that law firms and the SRA “can maximise the benefits of outcomes-focused regulation by removing bureaucratic processes which may have carried through from the old, rules-based, approach to regulation, but which are no longer necessary”.

The eight-week consultation will begin in December and changes to the SRA Handbook will be introduced in April 2013.

The decision was made at the first international conference of legal regulators, which was recently hosted in London by the Solicitors Regulation Authority and was attended by representatives of a number of national regulatory bodies, including the US, Canada, Ireland, Australia, Hong Kong and several African and Asian countries.

At the conference, attendees unanimously agreed to create an information-sharing network, which would provide them with a valuable source of support and information.

To begin with, it is envisaged that the network will encompass basic information on the regulated communities, disciplinary referrals involving specific cases, and provide a discussion forum to share ideas, ask questions, increase learning and look at ways to improve regulation.

It remains to be seen how effective this network will become, but, due to the diverse nature of regulation, where one national regulator can differ quite considerably from one in another country, an international network may increase cross-border co-operation.

The next international conference of legal regulators is likely to take place in San Francisco, in August 2013.

The list collates the names of law firms involved in complaints that have led to a formal decision by the Legal Ombudsman. It will be published on a quarterly basis, with the next list due to appear in November. This first list contained 920 complaints.

The information contained in the list includes the number of decisions made against each of the firms featured; the legal practice area; the date of the decision; the nature of the remedy awarded; and the reason for the initial complaint.

The list was set up following a consultation with the legal profession and aims to assist consumers, increase transparency and to encourage higher standards within the legal profession. However, whilst the information may be of interest to consumers, there is a fear that it could present some law firms in a misleading light, particularly those that do high volumes of work and generate relatively few complaints.