Stowell: No logic in fining power differential
The Solicitors Regulation Authority (SRA) needs more powers to prevent misconduct by law firms involved in strategic litigation against public participation (SLAPPs), peers have urged.
The House of Lords communications and digital committee said the regulator should have greater fining powers as well as the ability to conduct spot checks and to investigate third parties commissioned by law firms, such as public relations agencies and private investigators.
The committee has a long-standing interest in SLAPPs, abusive litigation aimed at shutting down legitimate comment and criticism.
The letter from chair Baroness Stowell of Beeston to Lord Chancellor Alex Chalk follows evidence it took earlier this month, including from the SRA, in which it asked for the power to conduct spot checks of firms without needing the trigger of a specific complaint.
The Economic Crime and Corporate Transparency Act 2023 sought to regulate SLAPPs for the first time and also removed the cap on the SRA’s fining power in relation to economic crime.
The SLAPPs Bill currently going through Parliament seeks to extend the provisions on SLAPPs beyond economic crime but does not replicate the provision on fines.
Baroness Stowell said it should: “At present, the regulator can fine traditional law firms up to £25,000 for wrongdoing related to SLAPPs. This sum is very small given the overall turnover of these firms. During the course of our work we have been told that this does not provide an effective deterrent.”
The SRA has the general power to fine alternative business structures and those working in them £250m and £50m and she said “the logic of having a fining limit 10,000 times lower for traditional law firms eludes us”.
Given the “very narrow” powers in the 2023 Act, she said the bill offered “a rare and valuable opportunity to enable the regulator to impose fines that actually deter wrongdoing and stop law firms from profiting from SLAPPs cases”.
The committee heard “repeated concerns that law firms may engage private intelligence firms or PR firms to survey, intimidate or smear defendants”, the peer continued.
“The SRA itself recently raised concerns that some law firms are not doing enough to ensure PR firms, or the private investigators they instruct, are acting lawfully and appropriately. Few firms in the regulator’s recent review had a written policy or carried out due diligence.
“The SRA said however that their powers of investigation do not extend to third parties.
“We believe that the government should therefore consider extending the remit of the SRA to ensure the activities commissioned directly by solicitors may be subject to regulatory oversight. This would help prevent law firms from simply outsourcing activities that breach the SRA’s professional standards.”
The committee was also worried that the limits of money laundering regulations “suggest that the proceeds of laundered money can be used to fund SLAPP claims”.
This should be accompanied by “increased investigatory powers for the SRA to conduct spot checks and request details from firms— particularly those with a track record of concerning practice”.
Baroness Stowell reiterated further concerns that the Proceeds of Crime Act 2002 “does not appear to prevent solicitors from accepting criminal funding to pay the legal fees for a SLAPP case” – guidance from the SRA was not enough, she insisted.
The committee also made recommendations to improve the SLAPPs Bill, a private member’s bill supported by the Ministry of Justice.
“The drafting of clause 2(1) and 2(2) suggests a degree of ‘expense, harassment, alarm or distress’ may be ‘ordinarily encountered in the course of properly conducted litigation’,” she wrote.
“This also suggests the ‘inten[t]’ to cause such outcomes within ‘properly conducted litigation’ is acceptable. In our view, this sets a peculiar and concerning standard for a bill that seeks to prevent abuse of the legal system.
“We understand that anti-SLAPPs measures must not undermine access to justice and it is important to include some caveats in the bill. But the current drafting appears to enshrine in statute a suggestion that the intent to cause harassment, alarm or distress may be a valid objective of properly conducted litigation.”
Baroness Stowell added that the bill needed to do more on pre-action protocols to capture “intimidatory tactics” used at an early stage to silence journalists.
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