The regulation of big corporate law firms is not "fit for purpose" and urgently needs reform, a report for the Law Society has concluded.

The report, part of a wider review of regulation of the legal profession, concludes that current arrangements for regulating "this vital sector of the UK economy" are not robust enough.

The Solicitors Regulation Authority lacks the expertise it needs to deal with corporate law firms and needs to adapt its systems to deal with the sector, it says.

The report warns: "Without rapid change, it is impossible to conclude that the current regulatory arrangements are fit for purpose."

The report contains the findings of a review by Nick Smedley, formerly a senior civil servant with the Ministry of Justice, commissioned by the Law Society of England and Wales.

Its conclusions will inform the wider review of regulation of the profession now being undertaken by Lord Hunt of Wirral.

It rejects the idea that a separate regulator is needed for the big City firms rather than one trying to meet the increasingly disparate needs of both the corporates and the High Street.

But it is highly critical of the present regulatory arrangements and urges an an overhaul so that they cater more appropriately for the needs of the City.

Echoing the criticisms of many City lawyers the report concludes that the Solicitors' Regulation Authority needs greater expertise and understanding, greater engagement with the profession and its clients and a more sophisticated approach that recognises the different parts of the profession.

It is important to regulate to avoid failures, rather than to deal with failures after the event, Mr Smedley says.

He says: "My recommendations for change would permit the introduction of a regulatory regime which is much more tailored to the particular risks of corporate law firms providing services to corporate clients."

He adds: "The regime which I hope to see emerge from this report will be swift, targeted, adaptable to change and highly-responsive to the market."

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