Bellamy: SRA fining power extends to pre-action behaviour
A new power for the Solicitors Regulation Authority (SRA) to levy unlimited fines in cases of economic crime will extend to strategic lawsuits against public participation (SLAPPs), the government has confirmed.
Earlier this month, the government published amendments to the Economic Crime and Corporate Transparency Bill currently going through Parliament to introduce a statutory definition of SLAPPs in relation to economic crime.
It would also create an ‘early dismissal’ procedure for courts and curb costs.
But in the report stage of the bill in the House of Lords on Tuesday, during which the amendments were approved, there were concerns that pre-proceedings activity would not be caught.
Saying that “one of the best defences probably lies with the solicitors’ regulator”, Conservative peer Baroness Stowell sought reassurance from the government.
“The SRA needs to have confidence that these amendments… will give it a sufficiently robust basis to penalise solicitors and law firms that pursue SLAPPs,” she said.
The bill removes the cap on the SRA’s fining power, currently £25,000, for cases of economic crime.
Justice minister Lord Bellamy responded: “The government’s intention is that this measure allows the SRA to impose fines above £25,000 against solicitors and law firms that fail to comply with the rule by taking part in or facilitating abusive litigation, whether or not such cases reach court or are struck out, provided that the SRA can establish a link between this type of misconduct and the prevention or detection of economic crime.
“This legislation is directed not just to cases that come to court but to pre-action threats and actions to deal with attempts to intimidate…
“We trust that the SRA will be able, on that basis, to take the necessary actions it seeks to take.”
Barrister Lord Faulks, a former Conservative justice minister but now a non-affiliated peer, said he could foresee “significant arguments as to what does or does not constitute a SLAPP” under the new law.
“That issue of itself has a lot of litigation potential. I am also concerned about the process of making the relevant Civil Procedure Rules. This can be a lengthy process.”
He said the House should “go further” by introducing a new criminal offence of making groundless threats in pursuit of a SLAPP so as to suppress investigations into economic crimes, with a maximum sentence of two years’ imprisonment.
This would deal with the claimant who “utters those words which lawyers tend to love: ‘I don’t mind how much it costs’” and sought to exhaust the defendant publisher before going to court, he argued.
Lord Bellamy – who confirmed that the government would extend the SLAPPs law beyond economic crime “as soon as a suitable legislative vehicle appears” – said the message for the Civil Procedure Rule Committee was “to get on with this as fast as we can”.
But he rejected the idea of a criminal offence. “With regret, the government, although sympathetic to the amendment’s objectives, do not feel that it would be right to criminalise access to justice in the way proposed…
“It would be very strong to say that it is, or is potentially, a criminal offence to commence proceedings in the courts. The courts have to be open. In the government’s view, the balance to be struck here is civil, not criminal.”
Lord Faulks objected to the characterisation that it would criminalise access to justice. He said: “In fact, it would create an offence that would help prevent the suppression of the publication of any information likely to be relevant to the investigation of economic crime.”
But, “with some reluctance”, he withdrew the amendment in recognition that the house did not want to go that far.
Later in the debate, former Master of the Rolls Lord Etherton, a cross-bencher, spoke to amendments seeking to define economic crime more precisely in light of the bill introducing a new regulatory objective in the Legal Services Act 2007 – “promoting the prevention and detection of economic crime”.
He said: “The meaning of the word ‘promoting’ lacks any clarity or certainty. It raises legitimate concerns about a potential lack of proportionality and overregulation by regulators, and about a lack of evidential risk as to those sectors most likely to come into contact with economic crime—for example, advisers rather than advocates.
“And even in the area of advisers, it is hardly likely to involve experts in the environment or town planning.”
He called on the minister to make a clear statement so that the legal regulators understood that “this is not a new regulatory duty but one that states explicitly what is already implicit” and that there should be a focus on relevant criminal activity: fraud, false accounting, money laundering and offences under any binding sanctions regime.
The peer argued that regulation must be based on “evidence of risk in particular areas of work and practice… such as transactional work rather than contentious and court-based work, and areas of advisory work which might be relevant”. Regulation must also be proportionate, he added.
Lord Bellamy explained that the definition of economic crime was “deliberately widely drawn” as it applied to other provisions in the bill.
“We expect regulators to use all the tools available to them, but their activity should be appropriately targeted and not in any sense just a box-ticking exercise. The objective does not directly place new duties on lawyers. It is directed to the legal services regulators, and existing safeguards remain.
“It is understood and expected that the Legal Services Board (LSB) will work closely with the professions in developing guidance to support the new objective.
“This will include a public consultation on any necessary policy statement or guidance to ensure that the regulatory objective is implemented in a targeted and proportionate way.
“This will allow the LSB to capture and analyse any concerns that professional bodies or others may have, or continue to have, in relation to the new objective.”
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