Business plan 2010

Last updated 29 October 2010

See SRA business plan 2009

1. Introduction

Our vision, as set out in our strategic plan, states that the coming three years will be a period defined by transformation. There are a number of interlocking themes to this transformation: firstly, the introduction of outcomes-focused regulation and, linked to that, the introduction of alternative business structures. Internally, there will be the transformation of the organisation's culture, the skills and behaviours of staff, and our business processes and systems. Finally, we seek to transform the way we relate to, and are seen by, the profession.

It is, without doubt, an exciting time for all involved either in the delivery of legal services or, like the SRA, in the regulation of legal services. It is a period of unprecedented change, and there will be many challenges ahead for us all. Our business plan for 2010 sets out the first steps we will take to make this transformation a reality and meet and overcome those challenges.

2. The SRA in context

Our organisation

The SRA is the independent regulator of solicitors and law firms in England and Wales. We are an organisation of 600 employees, split across two sites in Leamington Spa and Redditch. We have also recently established an SRA London office, from which much of our work with City firms will be based. Our work is overseen by the SRA Board, which is made up 16 members, of whom nine are solicitors (including the Chair); seven are lay members. The board is assisted in its work by eight committees and groups.

Our annual budget (direct expenditure) is £48.7m. We are funded by the solicitors' profession, through the Law Society, through the collection of the practising certificate fee.

Our purpose

Our purpose is simple and clear —to set, promote and secure in the public interest standards of behaviour and professional performance necessary to ensure that consumers receive a good service and that the rule of law is upheld.

Our approach

Our approach to regulation is as follows:

The Legal Services Act 2007 sets out eight regulatory objectives, which underpin all the work that we do. We set out in subsequent sections how our priorities contribute to the achievement of the regulatory objectives. The eight regulatory objectives are as follows:

• Protecting and promoting the public interest
• Supporting the constitutional principles of the rule of law
• Improving access to justice
• Protecting and promoting the interests of consumers
• Promoting competition in the provision of services
• Encouraging an independent, strong, diverse and effective legal profession
• Increasing public understanding of the citizen's legal rights and duties
• Promoting and maintaining adherence to the professional principles

We also operate in accordance with the better regulation principles; that is to say, our regulatory activities are transparent, accountable, proportionate, consistent and targeted.

We adopt a risk-based approach to regulation. The public has a right to expect us to focus our resources on the solicitors and firms that are most likely to harm their interests as consumers of legal services, and to act promptly and effectively when risks are identified. Similarly, solicitors are entitled to expect their regulator to operate in a proportionate manner, concentrating upon the issues that matter most and not wasting money on work that is inconsequential. We will continue to identify and manage these risks as they emerge. Our regulatory emphasis will shift from compliance with detailed, prescriptive rules to a more flexible approach that is focused on firms acting in a principled manner to achieve desired outcomes for clients.

As part of our shift to outcomes-focused regulation (OFR), we are keen to build a more mature relationship between the regulator and regulated, one founded on mutual trust and, importantly, shared understanding. We recognise that we must work together with the profession to deliver our priorities.

We will continue to work closely with the Law Society in its role as representative body for the profession. We will also seek to develop strong working relationships with the Legal Services Board, the Legal Ombudsman, the other approved regulators, consumer groups and individual consumers, as well as education and training providers.

We are committed to the promotion and progression of equality in all our activities. We are striving to embed equality and diversity as a core value when delivering our services. We have published our equality and diversity strategy, along with a strategic action plan that sets out the steps we are taking to ensure that equality and diversity is embedded into the culture and work of the SRA. We are committed to being an organisation that is

• a fair employer, recruiting, developing and retaining a diverse and talented workforce;
• a fair regulator, open, proportionate, non-discriminatory and transparent in the way we regulate a diverse profession; and
• inclusive and stakeholder focused.

3. Our progress in 2009

Annex 1 of this place sets out the progress we made against the key delivery areas our 2009 Business Plan. It includes a summary of progress against each of the five themes that were identified in 2009 and highlights some of the key achievements for 2009. For 2010 we have taken the decision to replace the strategic themes with four key objectives.

4. Planning and performance

The planning framework

The SRA Board approved the SRA's revised strategic plan in February 2010. This is a three-year plan, providing more detail on our vision and the high level, key activities we will need to undertake to help achieve our priorities. We made a commitment to review the strategic plan on an annual basis, and will revise it again in 2011 to ensure it remains relevant.

This is the SRA's third business plan, and covers the calendar year 2010. The business plan is the delivery mechanism for detailing how elements of our key priorities will be achieved in 2010. It sets out the key activities we will deliver to achieve our key priorities and how we will measure our success.

Each SRA Directorate will develop an annual directorate delivery plan. These plans will set out how the directorates contribute to achieving the SRA's key priorities, including the actions the directorate will undertake and the measures and targets against which the performance at a directorate level will be measured. These plans are currently being revised to reflect recent changes to our organisational structure.

In 2009 a new performance management system was implemented for individuals, which is being used again in 2010. This is an integral part of the overall planning framework. At the individual level, objectives will be identified that directly contribute to the overall achievement of the organisation's priorities.

Reporting performance

Performance against our key priorities will be reported publicly, on a quarterly exception basis, to the SRA Board. We will communicate our performance more fully to all of our stakeholders in our annual report.

Directorates will provide monthly performance reports to the senior management team, based on performance against the performance measures and targets, as well as the milestones identified in their directorate delivery plans.

Managing strategic risk

The way we identify and manage risk has been improved over the course of 2009, and that will continue into 2010. Each directorate has a risk register and associated risk action plan, which is managed by a risk coordinator. This arrangement is mirrored at the strategic level, with the Strategic Risk Register, which is overseen by the Risk and Business Plan Officer.

For 2010 the following strategic risks have been provisionally identified in relation to the four key priorities. Several of these risks are closely related to those identified in 2009 as part of last year's business plan. The risks may well change in the course of the year, as the risk registers are amended and reviewed.

5. Our objectives for 2010

Our newly revised strategic plan identifies four key objectives for the coming three years. The objectives are

• outcomes-focused regulation (OFR),
• organisational reform,
• be a respected and recognised regulator,
• be the lead regulator for alternative business structures.

These objectives represent the main outcomes we will deliver for our stakeholders. The following sections set out where our focus will be for 2010 (in terms of delivery against the objectives), why they are important to us and the key activities we will undertake in 2010 to help achieve these objectives. We have also included information on the measures and milestones by which we will judge our success and the key risks associated with the delivery of each objective.

Objective 1: Outcomes-focused regulation

Our focus in 2010

• Start to deliver our programme of transformation in terms of our regulatory approach—we will publish, for consultation, our OFR roadmap, setting out the broad context of OFR and regulatory practice.
• Redraft the Code of Conduct to deliver a clear focus on the key principles and outcomes we will expect solicitors and firms to achieve—we will seek to remove as much unnecessary detail and prescription from the current code, allowing greater innovation and freedom in practice.
• Enter into a comprehensive dialogue with all solicitors about OFR through the Freedom in Practice: Better Outcomes for Consumers campaign—we will reach out to all our stakeholders through a coordinated campaign of events, speaking engagements and consultations.
• Recruit new, and prepare and up-skill existing, staff to meet the challenges of the new regulatory approach—we will require new attitudes and behaviours from all our staff, alongside the development of regulatory competencies to enable us to successfully regulate in this new way.
• Carefully consider the best way to make the transition to the new regulatory approach in 2011—we will need to make informed choices and decisions based on an analysis of what is realistic in terms of our readiness for change, and the profession's, while taking into account the views of stakeholders.
• Begin to build a more mature and constructive relationship with those we regulate—this will inform the development of our approach to supervision, which encourages firms to be more open and honest with us, helps them to achieve the right outcomes for consumers, and identifies and deals appropriately with those who are unwilling or unable to do so.
• Think further about our relationship management by developing our relationships with large and complex commercial firms—we will continue and widen our pre-pilot visits of commercial firms to include greater range of firms.

Why this is important

Our current approach to regulation needs to change—as times change and we seek to become a more modern, regulator fit for the future challenges and changes brought about by the Legal Services Act. In the past, our focus has too often been on the inconsequential details, and we have spent our time focusing on the low level details rather than the areas of greatest risk. We have tended to emphasise compliance with rigid, prescriptive rules. This must now change to a more flexible approach that encourages firms to be more innovative. This transformation will see us deliver a new approach to regulation—outcomes-focused regulation—which is more effective, proportionate and targeted, and improves our delivery of the regulatory objectives.

This will be a risk-based regulatory regime based on the core principles and high-level outcomes firms must achieve. It will allow freedom to innovate, while providing a strong focus on the quality of the services provided to clients. It will minimise petty bureaucracy and concentrate our focus on what really matters. But most of all, OFR is important because at its heart is the desire and objective to deliver better outcomes for all consumers of all legal services. This will be achieved by the SRA improving the quality of regulation it delivers; in turn, legal services providers will improve the quality of service they provide to consumers.

Objective 2: Organisational reform

Our focus in 2010

• Continue the successful delivery of our Enabling Programme to ensure that our core business processes have been overhauled and modernised
• Implement new ways of working, supported by an upgraded IT infrastructure to enable the organisation to meet the demands of the future
• Put in place the right technology for the right people to give us the platform from which to deliver excellent customer service, in a more effective manner
• Transform the SRA's culture to be one which is unequivocally positive, dynamic, cooperative and proactive
• Complete the restructure of the organisation to ensure the SRA is led and managed effectively, that there is leadership and the right skills set at every level to deliver and embed the new culture
• Make sure that we have the right people with the right behaviours and skills in the right roles and that people are supported by learning and development opportunities that are both relevant and of high quality
• Identify and procure a single SRA site in the West Midlands—this will help to unite the organisation and create a greater sense of shared purpose and improve efficiency in the way we work.
• Control the SRA's financial resources and demonstrate the best possible use of our resources, effective management of our financial resources and delivery of value for money in all our activities

Why this is important

This priority sets out how the SRA will transform as an organisation over the coming three years to become both a more effective regulator and employer of choice. There are three elements to the successful delivery of this priority: our systems and processes, our people and culture, and our resources.

We need to able to respond to the changing legal regulatory environment and evolve our way of working to deal with the challenges of the Legal Services Act. Therefore, we will need to be operating differently and more effectively using appropriate technologies and business processes that result in a better service to all our internal and external customers, at a reduced unit cost.

Our people are our organisation's greatest asset. Therefore, we must reward them effectively, and retain and recruit the high quality staff we need to deliver our priorities. We need to ensure our policies and practices are simple and flexible, and support our managers in getting the best out of people. We must make sure we have the right people with the right skills, behaviours, focus and training to deliver our priorities and to meet the challenges ahead with confidence and competence.

We are operating in a challenging economic and financial climate; we have a limited budget within which to deliver our services and discharge our regulatory responsibilities. We must demonstrate value for money in all our activities, and show that we are transparent in what we spend, and how and why we spend what we do. As the financial pressure increases on the profession, it is only right that we demonstrate our ability to manage our resources as effectively and efficiently as possible, minimising the cost of regulation as far as we are able to.

Objective 3: Be a respected and recognised regulator

Our focus in 2010

• Ensure that the SRA delivers independent, proportionate, accountable and fair regulation and that we continuously review and audit our regulatory processes to ensure they are fit for purpose and in line with the principles of good regulation
• Continue to deliver to a high standard and in an effective, timely and competent manner a number of core services such as investigations, compliance monitoring, guidance and training provision, in order to maintain the confidence of both the public and the profession
• Strive to become an ever-more-effective regulator known by all our stakeholders for our delivery of service excellence
• Develop a customer-centric approach and provide excellent customer service in all our activities to all our customers including internal customers—by adopting a highly customer-focused approach, the hallmark of which is excellence in customer service and care, we will better understand the needs and requirements of our customers, and use this to identify and drive improvements in the way we regulate.
• Ensure that we have a better understanding of all our internal and external stakeholders: We want to make sure that all our stakeholders—the public, the profession and consumers—know and recognise the SRA as a regulator that demonstrates fairness and consistency, and takes prompt action to protect and promote the public interest.
• Implement a new approach to the calculation and collection of the practising certificate fee that is fairer and takes greater account of regulatory risk—the fee we will introduce will include an individual fee and an entity fee, with a firm's regulatory payments based on banded turnover.

Why this is important

We need to able to respond to the challenges and seize the opportunities laid down by statute to ensure that all stakeholders have confidence in our ability to regulate effectively and efficiently in the public interest. We need to demonstrate that the SRA is a model regulator and be acknowledged by the sector, the profession and consumers for the standards we set and the prompt action we take.

Our customers are all those who use our services—both those external to the organisation and those within the organisation. It is fundamental to our success as a regulator that we are more customer focused and provide a modern, first class service to all our customers that is delivered in the way they want and when they want it.

As a regulator, we must understand and respond to the views of all of our stakeholders, so that the regulatory approach we adopt reflects what they are telling us. We need to build and further develop relationships with all of our stakeholders to raise the profile not only of our organisation but of the work we do and how our stakeholders can be involved in our work. We must ensure that all of our stakeholders have the opportunity to influence our thinking and decision making, paying particular attention to those for whom it has traditionally been hard to engage. We must use stakeholder engagement as a driver for improvement and change.

The Legal Services Act requires the SRA to regulate not only individual solicitors but also firms. This enables a fairer and more transparent fee system in line with the principles of good regulation, involving both individual and firm-based fees. Therefore, a change in the method of paying for regulation was inevitable. The reform is also important to end the historical inequalities of the existing system, which is an unfair and clumsy one-size-fits-all approach to collecting the practising certificate fee. The new system we will seek to implement, with its closer focus on regulatory risk and the use of turnover to assess how much firms should pay, will be much fairer.

Objective 4: Be the lead regulator for alternative business structures

Our focus in 2010

• Position the SRA not only as ready to regulate alternative business structures (ABSs) when they arrive but also as the regulator of choice for these new structures
• Work to develop our rules and capability to be in a position to be the first regulator to apply to the Legal Services Board to become a designated, competent licensing authority to enable us to license and regulate ABSs
• Develop an approach to regulating ABSs that includes the same consumer safeguards as those applied to traditional legal practices—we will also ensure that those who own and invest in ABSs meet a certain standard and demonstrate that they are fit and proper. We will encourage innovation in the development of these new business models.

Why this is important

This priority encapsulates our desire to lead the changes in the regulatory landscape brought about by the Legal Services Act. This is work intrinsically linked to our wider programme of regulatory reform. With more and different types of business structures entering the marketplace, we will need to be able to specify the outcomes we all want to achieve and to ensure we focus on regulating those individuals and firms (whether ABSs or traditional law firms) that present the greatest risk. Therefore, as we develop outcomes-focused regulation, we must also develop our approach to regulating ABSs.

As the concept of competition in legal services regulation becomes a reality, with our customers potentially able to choose their regulator, we must rise to this challenge and demonstrate that we are the regulator of choice.

Annex 1: Our progress in 2009

Setting the standards

We pressed forward with the implementation of the changes brought about by the Legal Services Act. We successfully completed, on schedule, the rules, regulations and guidance needed and acquired the necessary approval to enable legal disciplinary practices, firm-based regulation and the new regime for recognised sole practitioners. The Code of Conduct was revised and published to reflect these changes in the summer. We have also begun a review of the Solicitors' Accounts Rules and established a Rule 6 working group to focus on improving compliance with this particular rule.

We successfully implemented the work-based learning pilot and continued with the implementation of LPC2 (Legal Practice Course II). Our "Agenda for Quality" was launched, kick-starting the debate on assuring quality in the delivery of legal services. The new regulations for the qualified lawyer transfer regime were consulted on, drafted and submitted for approval to the Legal Services Board. The Higher Rights of Audience reform neared its conclusion; a new qualification scheme was put in place in April 2010. One of the main objectives for the quality assurance team in 2009 was to ensure that all activities are carried out in accordance with the decision-making principles, documented procedures, delegations and quality checking. This included the recruitment and appointment of external examiners for the new LPC, the development and delivery of training for them and undertaking validation events for providers applying to offer the new LPC from September 2010, 200 external and 100 in-house CPD monitoring activities, 68 Professional Skills Course monitoring activities and complaints resolution. This also included completing 200 monitoring visits and dealing with all applications and renewals fairly, consistently and in a timely manner.

Support and monitoring

We published our vision for a step change in regulation, setting out our intention to refocus regulation on proportionate risk-based supervision and to engage with and regulate firms more efficiently and intelligently. We made significant progress in developing our approach to the regulation of corporate and large law firms, through the completion of the City firm pilot. We also responded in full to the Smedley Review of the Regulation of Corporate Legal Work, and subsequently launched our Corporate Regulation Project and appointed a new director to head this up and put in place plans to establish a London office of the SRA.

Improvements were made in the accessibility of the guidance we provide to the profession, including the publication of Question of ethics, as well as specific guidance on preparing for ABSs and SRA Update. The Ethics Guidance Helpline performance improved significantly, with 85 per cent of calls answered within 45 seconds, and 100 per cent of correspondence dealt with within 10 days. A more targeted and diverse programme of events to engage with the profession was developed, including Regulation Roadshows, client care seminars, a series of focus groups on specific consultations for the profession and a programme of workshops for specific equality groups.

Consumer protection, enforcement and discipline

We reviewed the financial protection available to safeguard consumers, carried out a comprehensive review of the Compensation Fund arrangements and reviewed the protection afforded to clients in the event of the collapse of a bank in which client money is held and the operation of the assigned risks pool.

We made progress in becoming a more transparent and accountable regulator by publishing our transparency policy, more details on how we investigate firms, and the principles that underpin our regulatory decision making, as well as launching the Single Report Project. We also commissioned research to better understand the reasons for disproportionality in regulatory decision making.

We continued to work to protect consumers and improved the timeliness and transparency of prosecutions brought to the Solicitors Disciplinary Tribunal, with 95 per cent of SDT cases issued within 12 months and 60 per cent within six months. We responded to increased demand, conducting 97 interventions in a proportionate and timely manner with the overriding aim of protecting the public.

Access to justice, transparency and consumer information

We took significant steps in the journey to implementing alternative business structures by 2011. We successfully passported all firms and sole practitioners to the new regulatory regime in March and July 2009, respectively. We also moved the debate on ABSs forward by publishing our discussion paper on the principles to be adopted in regulating ABSs in June.

Much progress was made in engaging with consumers, through the implementation of the Consumer Engagement Strategy and Action Plan. Our second consumer research study was also published; it included a supplementary study on consumer experiences in terms of dealing with solicitors for conveyancing purposes. We also built relationships with key consumer groups and other regulators through the Professional Regulators' Forum. We developed and consulted on our Complaints Handling Policy as well developing and launching a Consultation Strategy for the SRA.

Organisational improvement

We made major headway in moving towards obtaining the new technology we need to become a regulator fit for the future. Our Enabling Programme (EP) Blueprint and initial funding were approved in April, and a Programme Director was appointed to lead the EP, along with a team of staff made up of secondees from across the business. We also revised and consulted on the revisions and extensions to our Polluter Pays policy and charges.

Corporately, progress has been made in developing our approach to risk management and business planning, which has been welcomed by the Scrutiny Committee as they sought to discharge their audit and oversight role. A new performance management framework together with performance-related pay and a competency framework were introduced. We also successfully delivered the first full year of the Equality and Diversity Strategy and Action Plan, completed equality impact assessments as per the agreed and published timetable, and held our first Diversity Week.