SRA: Nearly 11,000 concerns reported to regulator in 2022/23
The Solicitors Regulation Authority (SRA) has used the enhanced fining power to issue more than £1.5m fines on solicitors in its first two years, new figures have shown.
Meanwhile, the SRA Compensation Fund paid out £41m to clients who lost money at the hands of solicitors in the year to 31 October 2023.
We also learnt that 13% of all law firms are now alternative business structures (ABSs).
The figures came in a huge statistical dump from the regulator just before Christmas in the shape of 2022/23 annual reports from the different areas of its operation.
The SRA does not explain why it took nearly 14 months from year-end to produce the reports, although in places they do include more recent figures, including about fines.
The maximum it could fine traditional law firms or someone working in one went up in July 2022 from £2,000 to £25,000 (ABSs have a separate regime – £250m maximum fine for a firm and £50m for those working in them).
The SRA said that it issued 96 fines of more than £2,000 up to August 2024, totalling £1.55m. This was made up of £1m in fines to 54 firms and £550,000 to 42 individuals. We reported last month on the fine closest to the limit to date.
Some of these fines were part of 794 cases where it took regulatory action in 2022/23.
In 695 cases, the SRA took internal action – such as letters of advice and warning, rebukes, fines and putting conditions on practising certificates (205 cases of this – the first time the SRA has provided a figure for this action).
The five-fold increase in letters of warning compared to the previous year – from 44 to 217 – was driven by 120 cases of compliance with the transparency rules. Last September, the SRA revealed that it had issued a total of 439 official warnings and 36 fixed penalty fines since the rules were implemented in December 2018.
The remaining 99 cases were referred to the Solicitors Disciplinary Tribunal (SDT), an increase from 76 in 2021/22. “One reason for this is our increased activity on reducing the number of longstanding investigations,” the report said.
In October 2022, there were 286 cases that were more than 24 months old; by August 2024, there were 59.
Of the cases before the SDT in the year (some will have been referred before 2022/23), 63 solicitors were struck off, 13 suspended and 23 fined, while there was no order in six cases.
In specific areas of focus for the SRA, it received 73 new concerns relating to sexual harassment in 2022/23, and closed 75 matters during the same period; of these, 11 were referred to the SDT, one saw the issue of a section 43 order (controlling the future employment of a non-solicitor), six were closed with either a letter of advice or warning, and the rest resulted in no further action, many because of the difficulties witnesses had in giving evidence.
As of May 2024, 95 investigations into sexual harassment were ongoing.
The SRA investigated 22 new concerns relating to workplace bullying and harassment in 2022/23 and closed 13 matters, issuing one letter of warning and making one referral to the SDT, and the remaining 11 closed with no further action. “Most cases were closed with no further action due to challenges around witness co-operation.”
There were nine new investigations over non-disclosure agreements (NDAs), adding to 15 that were already ongoing. The SRA closed 13 of the 24, seven with letters of advice or warning and six with no further action.
From May 2022 to September 2024, the SRA said it received 82 concerns in relation to SLAPPs (strategic lawsuits against public participation). As of September 2024, 36 had been closed with no further action. Two cases were referred to the SDT, one of which led to a £50,000 fine just before Christmas.
In total, 10,963 ‘concerns’ were reported to the SRA in 2022/23, in line with the broad average of recent years. Of the 11,137 concerns it processed (including from the previous year), 1,712 were referred for investigation. The public provided the majority of reports (57%) and the profession 26% of them.
The compensation fund has been a huge topic of debate in the past year because of Axiom Ince, the huge increase in fund contributions, and the SRA’s consumer protection review. But these figures predate Axiom Ince and instead reflect the impact of the previous big collapse, the Metamorph Group, in late 2022.
Of the £41m in payments made during 2022/23 – the highest figure for several years – more than £27m related to Metamorph. From November 2022 to August 2024, the fund paid out more than £31m but also recouped £30.5m from Metamorph’s accounts.
The largest payment made in 2022/23 was £1.2m. The report said: “An individual had invested part of their pension fund into a property, and the solicitor gave the funds away to third parties. The solicitor was found to have acted dishonestly. We have recovered a portion of the funds, with work ongoing to recover the rest.”
In all, the fund made 1,102 payments in 2022/23 at an average of £37,000. Probate was the dominant cause, accounting for £23m, following by missing sales proceeds and deposits (£6m each).
The report on authorisations showed that the overall number of law firms in England and Wales continued to fall, to 9,328 in October 2023. Of these, 1,202 were ABSs, 13% of the total. The percentage was 7% in 2016/17.
There was also a drop in the number of applications to open new firms in the year, compared to 2021/22, down to 321.
However, more solicitors than ever have practising certificates, with the figure at 31 October 2023 up 3.3% to 166,256.
But the number of solicitors on the roll fell significantly in 2023, due to the first ‘keeping of the roll’ exercise in a decade. At the year-end, there were 201,690 solicitors on the roll, nearly 18,000 fewer than 12 months earlier.
An SRA spokesman said: “There is a significant amount of data and analysis we need to pull together across the five reports. However, it has taken us longer to get the reports out than we would have liked.
“We plan to review our approach to publishing these reports, including how we can share relevant information and data more swiftly.”
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