The SRA continues to make progress despite delays in introducing the Legal Services Act.

One could be forgiven for thinking that four years later, the structures envisaged in the Legal Services Act 2007 might have been put in place. But despite earlier assurances by the key bodies involved, including the Ministry of Justice (MoJ), the Legal Services Board (LSB) and the Solicitors Regulation Authority (SRA), law firms will not be able to apply to become alternative business structures from 6 October 2011, as originally planned.

The fact that no revised date has been set is clearly frustrating, but this is because the MoJ needs to bring forward legislation to enact the Statutory Instrument. This will need to be scheduled into the parliamentary timetable, the consensus being that it might happen in late autumn.

SRA: encouraging engagement

The assumption remains that the LSB will formally appoint the SRA as the licensing authority, having already approved its application. Subject to parliamentary timetabling, the SRA should be open to receiving applications in early 2012.

In the meantime, the SRA has set up its alternative business structure team and issued significant guidance on the expected process and requirements. For firms with concrete plans, the SRA is actively encouraging engagement at this early stage. These discussions remain informal, but early engagement allows firms to address some of the SRA's potential issues and concerns and may, in turn, speed up their formal application come 2012.

Outcomes-focused regulation

Outcomes-focused regulation is a principles-based system that does away with many of the prescriptive detailed rules under the old code of conduct and allows firms to develop their own systems and controls to reflect the needs of the firm's clients and practice.

Despite the slippage in the alternative business structure timetable, the SRA continues to press ahead with the new outcomes-focused regulation, issuing the new SRA Handbook for implementation on 6 October 2011.

COLP and COFA

Chief among the structural changes required under the new code is the need for all law firms to appoint compliance officers for both legal practice (COLP) and finance and administration (COFA). The COLP will be responsible for ensuring that the firm complies with the terms and conditions of being an authorised body together with its statutory obligations. The COFA will ensure that the firm is compliant with SRA Accounts Rules. Both the COLP and COFA will be required to record any compliance failures and make these records available to the SRA, as well as to report any material non-compliance as soon as practicable.

The COLP must be a lawyer, but not necessarily a principal, while the COFA may be a non-lawyer. Firms will need to consider carefully these appointments to ensure that the relevant individuals carry sufficient authority within the firm to fulfil their respective roles. The SRA must approve appointments and, for most firms, nominations must be made by 31 March 2012.

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