David Green, the co-founder of The Strategic Partner and preferred risk management consultant of Paragon, spends a significant amount of time assisting law firms with strategic development and has shared the following news regarding the SRA’s proposal to increase the level of financial penalties it’s able to impose.

The SRA has published a consultation paper in which it proposes increasing its fining threshold to £25,000.  The regulator believes that doing so will allow it to deal with a broader range of disciplinary matters without the need to refer firms to the Solicitors Disciplinary Tribunal (SDT).

The consultation paper sets out the regulator’s proposals to:

  • Increase the maximum fine the SRA can issue to £25,000
  • Take into account the turnover or income of firms and individuals when setting fines.  For example, allow the issue of different penalty levels for a low earning junior solicitor compared to a senior equity partner for similar offences.
  • Introduce a schedule of ‘fixed penalties’ of £800 or less for a first offence and up to £1,500 for any subsequent offence, so that less serious concerns can be dealt with more efficiently for all concerned

 The SRA has stated, “Under our current framework, we are only able to fine traditional law firms and individuals up to £2000, which means that cases involving even low-level fines need to be referred to the SDT, incurring delays and further costs. Increasing this threshold would bring a range of benefits.”

 “…cases could be dealt with more quickly in a resource effective way, reducing the inevitable stress. It would also free up the SDT to progress the most serious cases, again cutting delays and stress for those involved.”

 “We think that it is time to review and reform our current fining framework, in order to provide a more robust and up to date approach that delivers greater consistency and a more effective deterrent effect, while being more cost-effective and efficient.”

The consultation period runs until 11 February 2022.

SRA Investigations and Interventions 

Whatever the outcome of the consultation, firms should have strict risk management and review processes in place to ensure they are compliant, therefore avoiding rule breaches that can lead to an investigation and action being taken.  Whether innocent, deliberate or through a lack of understanding, a breach may result in an investigation.  The cost of a serious breach and prosecution is about to become more expensive if this proposal is carried forward.  In addition, the firm faces the internal stress and cost of dealing with that investigation which is likely to be a time consuming and expensive process.

Receiving an enquiry from the Solicitors Regulation Authority or the commencement of an investigation is a very worrying time for law firms, their owners, and their staff.  Seeking expert advice from an independent consultant can prove invaluable to a firm or individual in making the right decision to acknowledge and accept a breach or successfully defend incorrect allegations.

Building a robust compliance structure will help ensure that the firm and its staff are compliant and that appropriate and measured action is taken quickly and efficiently in the event of a breach.  Prevention is better than investigation, and firms must work hard to ensure their process controls and procedures protect them.

Some useful links to help understand an SRA investigation and the process are as follows:

If you have any further questions concerning the issues raised in this article, Paragon, The Strategic Partner or the firm’s approach to risk management more generally, please get in touch using the details below

CONTACT US

For more information on the changing market, your firms’ PII renewal or to organise a meeting, please contact:

Ryan Senior

E rsenior@paragonbrokers.com

T +44 (0)20 7280 8254

M +44 (0)7827 575 652

Piers Winton

E pwinton@paragonbrokers.com

T +44 (0)20 7280 8224

M +44 (0)7787 375378

This article is published without responsibility on the part of the author or publishers for any loss occasioned by any person acting or refraining from action as a result of any views expressed in the article. Specific risk management advice requires detailed knowledge and analysis of each firm and practice area facts relating to the risk. The information included in this article cannot and does not attempt to satisfy this requirement for any of its readers.