Freelance Solicitors
What is a freelance solicitor?
Simple answer: an alternative, less administrative-heavy way for individual solicitors to provide legal services.
But to fully understand the short answer, a few things first.
Regulated profession
There are two key bodies that govern solicitors: The Law Society and the Solicitors Regulation Authority (SRA).
The Law Society is the professional body that regulates solicitors: keeps a roll of solicitors and issues a practising certificate for solicitors.
The SRA regulates the delivery of legal services by solicitors. At the most basic level there are two ways to access legal services – as part of a registered law firm or where a solicitor is employed as an in-house solicitor. The SRA provides a ‘seal of approval’ for law firms that it regulates, ie “law firm regulated by the SRA” You will often see this image which will link to the law firm’s SRA registration. An example of that logo is below.
The SRA also acts as a “guarantor” and complaints handler for SRA-registered law firms – if something goes wrong then a client can make a complaint to and/or seek compensation from SRA. This compensation doesn’t replace the professional indemnity insurance of the law firm and the insurance remains the first port of call for clients against negligent solicitors.
The traditional sole practitioner
An SRA-regulated “sole practitioner” is an individual who has registered a law firm with the SRA and provides a range of legal services which the SRA splits into two categories “reserved legal services” and “non-reserved legal services”.
The full list of what these are is included here but essentially it covers specific areas such conveyancing, immigration or conducting litigation.
Before 2019, if a solicitor wanted to start up his or her own practice, then that was the only route available.
Freelance solicitor
In November 2019 the SRA introduced a new way for individual solicitors to work and provide legal services: “SRA regulated independent solicitor” or the common name “freelance solicitor”.
This is how the Law Society defines it here (note this is behind a registration wall).
A solicitor is now able to register with SRA as freelance solicitor offering reserved legal services or non-reserved legal services and does not employ other solicitors. If they provide both, then they have to offer it in their own name and can not use a corporate vehicle like a company or LLP, ie they are a sole trader.
If registered only to provide non-reserved legal services, then the solicitor also has the option of using a corporate vehicle.
Why would a solicitor register as a freelance solicitor?
Simple answer: it is much easier than setting up an SRA-regulated law firm.
Provided you qualify to be able to register as a freelance solicitor, it is much easier, simpler way of delivering services if you want to remain a lone wolf, one-man band.
Most people who have had experience of establishing an SRA-regulated law firm, would advise against it because it was both incredibly expensive and burdensome administratively. Also, the insurance market has basically fallen away for sole practitioners for SRA-regulated law firms with very few providers and therefore very little competition.
However, the biggest underlying issue against establishing an SRA-regulated law firm is the exit if you want to close an SRA regulated law firm – you are required to put in place insurance which costs the equivalent of 3 years insurance premium. That can be very expensive and a large outlay. It also explains why so many sole practitioners coming to the end of their careers try to sell their practice rather than close it.
What have MMIHL done?
Mustafa is registered with the SRA as a freelance solicitor providing non-reserved services and which is provided via a limited company.
The range of work provided is general commercial and contract work which includes a number of areas such as intellectual property and data protection – essentially what an in-house lawyer would provide. This does not include any reserved services.
What are the pros and cons for using a freelance solicitor?
For clients the key pro of a freelance solicitor for non-reserved legal services is costs. There are simply a lot lower overheads which is reflected in the rate.
For clients the main con is that the SRA has a limited role in regulating the legal services and the client has to rely upon the terms and conditions of the contract with the freelance solicitor in the event of a problem. This is no different to other suppliers in other industries. The client does always have the option of complaining about the solicitor (rather than the corporate vehicle like the LLP) to the SRA and/or Law Society.
When a client uses a freelance solicitor operating via a company for non-reserved services the SRA requires a certain number of things to be notified to the client: please see here for the notice that we include as part of the standard terms and conditions.
As a client, should I use a freelance solicitor?
Simple answer: it is an option depending on what the client needs.
It can be more cost-effective alternative for commercial work and non-reserved legal services.
For reserved legal services for a client there is no longer a distinction between a sole practitioner operating a regulated law firm or a freelance solicitor.
And finally, what are consultant solicitors?
Just to complete this note, the legal industry has seen a boom in something called “consultant solicitors”.
A consultant solicitor is a self-employed solicitor, who registeres as a freelance solicitor but who provides their services via a regulated law firm who maintains that SRA registration, provide all the administration of having a law firm for example time recording and legal resources and other back-office functions such as invoicing and collection. However, usually the solicitor is responsible for their own marketing and anything else such as health insurance.
In exchange the solicitor gives a percentage the fees to the law firm, usually around 30% to 40% depending on the law firm. The key issue is that the consultant solicitors are not treated as employees of that law firm with targets but are self-employed and they can work as little or as much as they want, ie they have the flexibility.
More and more law firms are offering this to solicitors to retain those who do not want to become partners as well as specialist law firms who only have consultant solicitors on their books.
There are pros and cons for solicitors to operate in this way. The biggest pros are that they can provide legal services via a regulated law firm, have little administration, they keep approximately 70% of what they bill and can benefit from referrals and access to other specialists. The biggest con is the 30% to 40% and they still have to manage their practise as if they are employed by the law firm ie time record, raise bills plus bear other costs such as marketing.
For clients the main pro is that solicitor is part of an SRA-regulated company and the benefits associated with that. The main con is costs as the charge out rate is often higher to reflect the 30%-40% cut.
Queries?
If you have any queries, do contact us so that we can help you work out if we can meet your needs.
Date : 3 September 2024, version 1.1