Crispin Passmore, SRA executive director for Policy

The last 10 years have meant massive changes for the legal services market, so what does that mean for the SRA and its approach to regulation?
In many ways the changes of recent years are not new. But regardless of the driver for change we can be sure that law firms look less like each other now than they did 50 years ago. What's more, the last few years have seen the emergence of legal businesses that look less and less like traditional law firms - not just in their ownership structure but how they operate and what they deliver.

It just isn't possible to write a detailed rule book that applies either equally to every type of firm in every circumstance, or different but detailed rule books for each type of firm. The market is too dynamic and the costs would be too prohibitive. So, for a more plural market we need more targeted regulation. The level playing field is about tackling risk and fair and consistent regulation rather than the same rule book for everyone. For example, it makes little sense to apply the same PII requirements to a tiny sole practitioner and a global law firm.

What are the main challenges the SRA now faces?
Regulation has to change to facilitate the future of the legal market. Regulation does not come free. It imposes burdens on existing firms through direct costs of regulators that they pay for, forces them to incur other costs such as PII, and leads to wider compliance costs. These are costs that we need to address. But there is another cost that is often ignored and it is a cost paid by consumers and the wider public. Regulation can restrict competition, reduce innovation and limit choice. This price is paid by the silent consumers. It is a price paid by the one in three individuals that cannot afford legal services; the four in five small businesses that find legal services as essential but unaffordable and inaccessible; and by the large corporate consumers that pay so much for legal services. It is these realities that we must respond to if we want to be a better regulator. As a regulator, we cannot solve these problems - there are many other reasons why people don't use legal services other than the marginal costs of regulation - but we can give business a better chance of innovating and growing to meet that legal need.

How difficult is it to keep regulation relevant and how do you manage the process?
Our purpose is not easily found in legislation. Parliament has given us statutory functions to regulate solicitors as a title and, more widely, persons authorised to conduct reserved legal activities. We have regulatory objectives in legislation that we must have regard to when exercising our duties. We have the better regulation principles that apply to all regulators: to be transparent, accountable, proportionate, consistent, targeted. And soon a duty to promote growth will be added to this menagerie. We think we can simplify this by focusing on our core principles - we are here to protect consumers that need protection; and we are here to protect the rule of law and proper administration of justice.

How have you changed the way you regulate?
The SRA has been moving away from regulating for a vocational model of delivering professional services and towards a model that reflects the dynamism of the legal market. Licensing alternative business structures, an outcomes-focused handbook and risk-based supervision are the most visible examples. But these changes are not yet complete.

Some of the professional and legal market features are becoming increasingly dynamic and these are related to changes in the regulatory context. All pose real challenges to the SRA if we are to be a better regulator. So we are now focusing on the core regulatory purpose of the SRA, testing our regulation against the better regulation principles to ensure that we are targeted and proportionate.

Away from the obvious professional principles, what else does the SRA provide in today’s ever evolving market?
I think that 'solicitor' is still the most valuable brand for consumers. We need to have a public debate about what it means to be a solicitor in the 21st century. I think that it is about being a public servant in terms of duties to the rule of law, duties to the court and balancing competing duties ethically. But it is also about providing services that are relevant and accessible to the whole gamut of modern consumers, from the most vulnerable person in a police cell through to global corporate clients.

Our Training for Tomorrow programme will help provide opportunities for a diverse legal profession where quality matters as much as profits and the public standing of those we regulate is positive for the profession as a whole. It is, after all, the talent pool for our judiciary.

We particularly want ordinary consumers to know that solicitors can be trusted; trusted to provide good quality services at affordable rates.

You’ve done a lot of work to improve your relationship with large commercial firms but are there plans to do the same with smaller practices?
Our relationship with the high-impact firms is indeed much improved, as shown through research. But we do want to replicate that better understanding, openness and co-operation with other firms. That might mean that they contribute more to our policy-making or letting us know what they think that we should reform. Or it might mean that they find it easier to engage with supervision when issues or concerns arise.

What is doesn't mean for large or small firms is that we should - or will - duck difficult conversations, investigations or enforcement activity. I suspect most solicitors will welcome this, but we have to engage much more to refine our thinking about how we regulate smaller firms.

Do you think your general requirements are proportionate and targeted or are there are areas where they are unnecessarily onerous?
I think it’s a case of continuing to develop as we learn, as the market develops and as reforms made so far settle down. But we can always test our regulation to check that it is consistent with the "better regulation" principles. One of the shifts we are making is to ask ourselves if the current regulation can be justified, rather than asking if it can be removed. That is an important shift as it shows our intent.

And doing that has led us to make some early proposals that you will have seen. These cover changes to our minimum terms on professional indemnity insurance, changes to rules to increase Multi-Disciplinary Practices (MDPs) in the legal market and reforms to continuing professional development requirements. There is more of course that we have been consulting upon so far in 2014.

We have no doubt that we can do more. We will continue to look at education and training to ensure it provides flexible routes to qualify at the right level of competence. We will look again at the separate business rule and we need to think again about the 100 pages of rules relating to handling client money. And if lawyers, firms or consumers have ideas about what we can change then let us know - we are very open to other peoples’ ideas.

What’s next for the organisation and the way it regulates?
We will become operationally efficient and effective, focused on being good at what we do and easy to engage with, even when we are doing things as a regulator that are compliance or enforcement orientated.

We want to reduce the costs of regulation as part of making it more proportionate and targeted. You have seen the range of consultations so far in 2014 - we need to listen carefully on consultation and I want everyone with views (supportive or otherwise) to respond to them - we do listen as we showed on the issue of ratings for insurers.

And then we will develop other significant changes over next two years covering issues such as rules for regulating in-house lawyers; changes to the separate business rule; how we get the balance right on firms holding client money and how we simplify the handbook.

All of this is part of change to regulatory approach with less prescription, more freedom and associated responsibility for law firms, and of course holding to account those that deliver services in a manner that is consistent with consumer protection and the rule of law.