Advice and Information related to Rule D2.1.3 – Applying for Waiver Applying for Waiver

Purpose of the rule

Rule D2.1.3 is intended to promote achievement of the regulatory objectives (in particular those relating to protection and promotion of the interests of consumers and the public generally) by seeking to ensure that managers of practice units have the necessary experience, skills and support to secure compliance by the practice unit with all regulatory requirements. The rule is predicated on the belief that, at least in the absence of special circumstances, acquiring those necessary skills and experience takes a period of time of practise as a fully qualified solicitor – and maintaining the necessary skills requires that at least some of that experience of practise is recent.

Standard Requirements

Rule D2.1.3 therefore requires that a solicitor who wishes to practise as a manager of a practice unit must usually meet two requirements, being that:

1. he or she has been employed * as a solicitor for a cumulative period of three years (this requirement is sometimes referred to as ‘the 3 year rule’); (Note that this requirement need not be met by continuous practice over one three year period and need not all have occurred in the last three years – but only periods of practise whilst holding an unrestricted practising certificate and not subject to an undertaking given under the Admissions Regulations count for this purpose);
2. he or she has been employed as a solicitor for the entirety of the period of 12 months which immediately precedes his or her commencing practise as a manager (sometimes referred to as ‘the 1 year rule’).

These requirements are disapplied (by Rule D2.1.4) if the relevant practice unit already has at least one other manager who has practised as a manager for at least 3 years. This recognises that, in that scenario, the less experienced manager will have the support of his or her more experienced colleague(s) and responsibility for compliance will be shared.

Where the Rule D2.1.3 requirements do apply (e.g. where a solicitor wishes to practice as the sole manager of a practice unit) but have not been met, the solicitor cannot commence practise as a manager unless a waiver of the unmet requirement has been granted.

Policies governing consideration of waiver applications

Overarching Waiver Policy

All applications for waivers of practice rules are considered in light of the Society’s overarching waiver policy.

Practice rules are intended to promote compliance with the regulatory objectives and hence waivers are only granted in exceptional circumstances.

An applicant for waiver of any requirement of Rule D2.1.3 is expected to set out the exceptional circumstances and explain why, in the applicant’s view, those circumstances justify waiver. Circumstances which may justify waiver may include the fact that application of the standard rule in the precise circumstances would:

• cause an unintended or capricious effect not consistent with the principle intended to be achieved by the rule;
• cause undue hardship to the applicant or client not consistent with principle;
• prevent a benefit to clients or consumers.

The applicant would also be required to establish to the Society’s satisfaction that grant of the waiver requested would not carry any appreciable risks to the interests of clients or consumers or achievement of the regulatory objectives or adoption of best regulatory practice (which requires that regulatory activities are targeted appropriately and carried out effectively, and in a manner which is transparent, accountable, proportionate and consistent).

Waivers will also not be granted where to do so would prejudice the integrity of the principle which the standard rule seeks to achieve.

Policies specific to applications for waiver of Rule D2.1.3

Applicants should set out the circumstances and explain why those circumstances justify waiver, and also provide the information listed under "All applications" below.

As detailed above, Rule D2.1.3 contains two separate requirements. Many applicants for waiver of Rule D2.1.3 meet the first requirement (the 3 year rule) but cannot meet the second (the 1 year rule), often due to a delay between ceasing employment and commencing as a sole manager in a new practice unit. The Society recognises that it will rarely (if ever) be possible to transition from one role to the other ‘immediately’ and that, depending on the applicant’s individual circumstances, that transition may take some time without the delay having any appreciable impact on the currency of the applicant’s experience or skills.

Waiver applications in respect of the first requirement of Rule D2.1.3 (the 3 year rule) are less common. Applicants for waiver of that element of the rule will be required to demonstrate that their circumstances are exceptional, and that they do have sufficient skill, knowledge and experience to ensure compliance with all regulatory requirements and protection of the interests of clients and the public.

The information which should be provided with an application for waiver of D2.1.3 should include:

All applications

• -applicant’s proposals in relation to attendance at Practice Management Course (if required – see Rule D2.2);
• details of internal management controls, compliance and support systems and mechanisms;
• details of management of cashroom and staff members/outsourced providers of cashroom services;
• contingency plans in relation to any planned or unplanned absence of the sole manager;
• (where there has been a period of longer than 6 months since last practised as a solicitor) activities during any absence from practice – particularly details of any legal or management roles held or performed;
• General information in relation to compliance capability of the new practice unit.

 Applications for waiver of 3 year rule – also include:

• a summary of the objectives of the new practice unit – work types to be offered, sources of business anticipated;
• an explanation of why the applicant considers that he or she can demonstrate attainment of the necessary experience and skills to procure compliance with regulatory requirements by the practice unit – prior experience in the legal profession (beyond practising as a solicitor) or in another management or regulatory role may be relevant;
• clarification of why the applicant considers it inappropriate/unnecessary for the applicant to be asked to wait until compliance is attained before commencing practise as a manager;
• Details of CPD undertaken over last 24 months and details of current development plan.

Process and timescales

All applications for waiver should be made on the relevant form (see the Forms and Fees related to Rule D2.1.3) and addressed to the Secretary of the Practising Certificate Sub-Committee.

The Practising Certificate Sub-Committee usually meets on the first Thursday of each calendar month (subject to that being a business day and there being sufficient business for the Sub- Committee to consider). For an application to be considered by the Sub-Committee all relevant information to be included in the application should be with the Secretary to the Sub-Committee no later than 5pm of the Wednesday of the week preceding the week during which the Sub- Committee is due to meet.

The Secretary of the Sub-Committee (and certain other senior members of staff of the Society) may grant certain applications for waiver under authority delegated by the Sub-Committee but this is highly dependent on the precise circumstances and the safest course is to assume that any application may require to be considered at a meeting of the Sub-Committee and time the submission of the application accordingly.  It may not be possible to consider any application outwith the usual monthly meeting schedule.

* Note that the Society regards those who have been practising as managers in practice units (partners in practice units which are traditional partnerships; directors/shareholders of practice units which are companies; or members of practice units which are LLPs) as having been ‘employed as a solicitor’ for the purposes of Rule D2.1.3, regardless of their status under employment or taxation law.