Fines: individuals within ABSs could be fined up to £50m
The maximum fine for misdemeanours by alternative business structures (ABSs) should be £250m, the Legal Services Board (LSB) has decided.
Having considered the amounts of money made by some law firms out of miners’ compensation claims – with the top firm earning £135m – the LSB acceded to a call from the Solicitors Regulation Authority (SRA) to substantially increase its original plan to set the maximum fine ABS licensing authorities can levy at £150m.
The LSB said that “the maximum penalty must be a sufficient deterrent to non-compliance and that in setting the level of a penalty a licensing authority must have sufficient flexibility to eliminate financial gain from non-compliance yet impose a proportionate amount”.
The board also took account of the fact that the SRA “will have a significant role to play in the regulation of ABS and has experience of regulating in a framework where the Solicitors Disciplinary Tribunal has the power to impose an unlimited maximum. The SRA’s views therefore carry significant weight”.
The wording of the Legal Services Act 2007 has prevented the LSB setting an unlimited fine, as was originally intended, and so putting it very high “is likely to have the same deterrent effect as the threat of an unlimited amount”, it said.
The maximum fine for individuals within ABSs will be £50m, as originally proposed, despite concerns expressed by ILEX Professional Standards that this is too high. The LSB said it hoped the greater disparity between the individual and firm levels would allay IPS’s concerns.
The LSB, which received just five responses to its consultation on the issue, has now formally requested that Lord Chancellor Ken Clarke consent to the rules, as required under the Act.
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