Law Society:
The Solicitors Regulation Authority’s (SRA) needs to rethink the “potentially unlawful, confusing and flawed” proposals to update its fining regime, the Law Society said yesterday.
Vice-president Richard Atkinson warned that large fines imposed on legal aid firms “could lead to firms closing down”.
He added: “There is a strong risk that if the SRA’s proposals are implemented, it will lead to more legal aid deserts.”
The Law Society has joined the opposition we reported earlier this week from the City of London Law Society and Birmingham Law Society to the plans, predicting that they would “undermine the role of and authority of the Solicitors Disciplinary Tribunal (SDT) without rationale”.
Among a catalogue of complaints in its response to the SRA consultation, the Law Society said a ‘one size fits all’ fining framework was “not fit for purpose” and called for a separate framework for economic crime – the last government gave the SRA unlimited fining powers for cases involving economic crime, while retaining the £25,000 cap on fines it can impose on traditional law firms and solicitors for other misconduct.
There is already a separate legislative regime for alternative business structures, which the SRA can fine up to £250m, and £50m for individuals working in them.
The Law Society questioned the logic behind, and evidence for, the proposed increases in fining levels, especially as they were only set recently.
“Higher fines do not necessarily provide a credible deterrent or maintain public trust, and the SRA has not provided empirical evidence to support this claim.”
As with the other responses, it suggested that basing fines on gross income of law firms and individuals showed the SRA did not understand how the profession worked.
“Turnover is not a reliable indicator of profitability and does not equate to the ready availability of cash. This may be especially true of smaller firms or those reliant upon legal aid work,” it said.
The society questioned whether the idea of using other metrics in exceptional cases – international turnover for firms and an individual’s income from non-legal work – was within the regulator’s remit.
The SRA’s approach could lead to “unjustified inflation in fining levels, potentially adversely affecting the economic viability of firms and the ability of individuals to practise”, it went on.
It echoed Birmingham’s worries about the independence of decision-making as well as a lack of transparency, “including the opportunity for solicitors and firms to be able to make representations through an independent process that can deal with challenges to SRA decisions”.
All serious cases of misconduct should continue to be referred to the SDT, which can impose unlimited fines and other sanctions. The response rejected the assertion that that fewer cases being referred to the SDT was “somehow a positive”.
It added: “Smaller firms and solicitors from a Black, Asian, or minority ethnic groups may be more inclined to agree to a regulated settlement for economic reasons, as (given the evidence referred to by the SRA in the consultation document that solicitors from such backgrounds are more likely to have lower incomes) they may not have the resources to challenge the regulator.”
The right of appeal to the SDT was not the safeguard the SRA made it out to be, the society added – the grounds of appeal were “seriously constrained”
All of the requirements of fair, transparent and open justice were satisfied by the SDT but not the SRA’s proposals. The Law Society said there should be “external and independent oversight of all SRA decisions, at the very least”.
Mr Atkinson commented: “The Law Society maintains its strong opposition to the SRA’s ambitions for any further extension to its fining powers and is strongly opposed to these unfair, disproportionate and potentially unlawful proposals…
“The SRA does not appear to fully appreciate the impact these proposals could have for smaller firms and individuals with lower incomes and protected characteristics, when it proposes to introduce minimum fine levels. Increased fines overall could lead to firm closures or bankruptcy for individual solicitors.
“The SDT has a much wider range of powers to sanction solicitors’ misconduct. The SRA, is in effect, proposing to cut the SDT out of the process by using only one limited type of sanction.”
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