Fines: New regime approved
The Solicitors Regulation Authority (SRA) is to publish the salaries of the solicitors it fines and impose ‘default salaries’ on those who refuse to reveal them.
The regulator also said that last summer’s increase in its fining limit from £2,000 to £25,000 would enable it to reduce cases referred to the Solicitors Disciplinary Tribunal (SDT) by around 40 every year.
The SRA referred 119 cases to the SDT in 2021 – the latest available figure.
The SRA has been able to fine individual solicitors up to £25,000 since July last year, a decision taken by the Ministry of Justice and implemented by Parliament.
The Legal Services Board (LSB) has now approved the new fining regime to sit alongside the increased limit following a consultation last year.
In its decision notice, the LSB said the SRA argued that since fines would now be based on a solicitor’s income, both the level of fine and the percentage of income this represented should be published to give “an accurate picture” of what was happening.
Solicitors who refused to reveal their salaries would be moved up to the next fine band and given a ‘default salary’, based on data from legal recruitment consultants.
Responding to a question from the LSB on data protection, the SRA said it had “carefully considered the legal position, alternative options and the need to balance the privacy of individuals against the SRA’s regulatory obligations”.
The regulator added that it would be able to withhold salary details if a lawyer could show it would be “disproportionate” to publish them.
The SRA said it expected to refer a “limited number of additional cases” to the SDT because of the rule changes – earlier this year, they issued a joint statement outlining their “shared expectation” of the types of case the SRA would deal with and those that would be referred to the tribunal.
The SRA predicted that additional cases referred to the SDT under the new rules would be “more than offset by the number of cases that do not require hearings” because of the increased fining powers.
“The SRA estimates these types of cases are likely to reduce SRA referrals to the SDT by about 40 cases per year.”
Under the new regime, the SRA will hold disciplinary hearings in public for the first time.
The LSB said this might be where the case concerned raised “particularly serious, new or unusual issues”.
An example could be a case involving allegations of dishonesty or lack of integrity, where the lawyer was manager or owner of an alternative business structure (ABS). ABSs have a different statutory underpinning and the SRA can fine people who work for them up to £50m.
However, the SRA said it expected these hearings to be “rare”, and, based on previous sanctions data, estimated they would take place “less than once per year”.
Under the new rules, the more serious decisions must be taken by adjudication panels, rather than single adjudicators. Panels have three members, including a lay and legally qualified member and a chair.
On fixed penalty fines for administrative failures, the SRA said these would only be issued after a law firm has been notified that they are in breach of requirements and given an opportunity to comply. The penalties are set at £750 for the first breach and £1,500 for a subsequent breach of the same kind within three years.
“The SRA notes that where it identifies more numerous breaches, or an ongoing failure to engage and comply, its approach may be to remove the case from the fixed penalty scheme, and instead conduct a full investigation, as this may suggest a wilful or reckless disregard for regulatory obligations.”
Leave a Comment