Legal Business

More in-fighting as Law Society contests SRA’s attempts to gain greater fining powers

Further cracks in The Law Society’s already strained relationship with the Solicitors Regulation Authority (SRA) have emerged this week as the representative body prepares to contest its regulatory arm’s attempt to increase its fining powers over law firms.

In a consultation which ends next month, the SRA has invited views on its proposal to increase the current level of fining powers over City and regional law firms to as much as £100,000. However, the Law Society has said it has ‘concerns over the functioning of the enforcement team within the SRA’.

At present, under the Solicitors Act 1974, the SRA must refer solicitors or law firms to the Solicitors Disciplinary Tribunal (SDT) if it considers a fine greater than £2000 is appropriate for misconduct or breaches of regulatory requirements.

The SRA estimates that disciplinary matters which involve a fine being imposed or agreed to by the SRA rather than the SDT would generally be resolved ten months quicker and would result in cheaper legal costs in the region of £8000 for transferrals to the SDT.

The SRA said there is also ‘a risk of perceived absurdity and unfairness in the lack of consistency’ with how alternative business structures (ABSs) are treated. Under the current regime, the limit on fines for ABSs is currently £50m for individuals and £250m for firms.

The proposal added: ‘We are considerably limited in the scope of matters which can be dealt with without prosecution before the SDT. The current regime fails to take advantage of the fact that a considerably quicker, cheaper and more proportionate regime for levying fines against law firms is already in place for ABSs.’

However, a Law Society spokesman said: ‘The Law Society does not believe that this is the right time for the SRA’s fining powers to be increased. We share the Legal Services Board’s concerns about the functioning of the enforcement team within the SRA.

‘There continues to be a lack of transparency about the operation of the enforcement team, which makes it impossible for the Law Society to support any increase in the powers available to it.’

The disagreement comes after the autumn of 2013 saw the Law Society’s respond to the Ministry of Justice’s legal services review by calling for a return of many of its pre-Clementi regulatory powers, while the SRA called for far greater independence.

It also comes after an earlier application by the SRA to raise the limit for fines on ‘traditional’ firms to £250m to match those of ABSs was rejected by the government in October 2012, having received opposition from the Law Society and SDT, although it received support by the Legal Services Board.

On 17 December a vote of no confidence was passed in the Law Society’s leadership, however the vote has so far been ignored. 

francesca.fanshawe@legalease.co.uk