All things being equal

At a time when allegations of racism are rife amongst key institutions of our society, it should be of no surprise that the Solicitors Regulation Authority (SRA) is the next organisation to come under fire. A recent report by Lord Ouseley, the former head of the Commission for Racial Equality, has declared that the SRA is 'open to the charges of institutional racism'.

Lord Ouseley was appointed by the SRA, with the support of a Working Party, to conduct an independent review into why BME solicitors appear to be disproportionately targeted by the SRA.

The report was almost perfectly timed with an unprecedented £10m claim against the Law Society and the SRA for racial and religious discrimination, harassment and victimisation, which chimes with the undertone of the report. This has resulted in a flurry of negative press claiming that the SRA is guilty of racism '“ but is this a fair conclusion?

The SRA is no stranger to claims of racial discrimination. In 2006 the Law Society published a report on The Impact of Regulatory Decisions of the Investigations and Enforcement Unit on Black and Minority Ethnic Solicitors. At the time 62 per cent of investigations were launched against non-white, mixed and 'other' lawyers, a group which represented just 22 per cent of the total population of solicitors.

Two years later, and Lord Ouseley's report suggests that substantive progress has not been made. It states that one of the main reasons for disproportionality is the fact that sole practitioners and small firms are targeted for regulatory activity. Most law firms in England and Wales are small, with 86 per cent having four or fewer partners. Furthermore, 5.8 per cent of BME solicitors, compared with 3.4 per cent of white solicitors, are sole practitioners with a large number of the remainder working in small firms. So, without being a maths genius, one can already see the statistics are mounting up against BME solicitors. This was reflected in the comments of Anesta Weekes QC, chair of the working party, who noted that 'the finding that there are approximately some 1,700 complaints against small firms or sole practitioners is very worrying, because a high proportion of BME solicitors are concentrated in this category'.

The question that should then be asked is why are sole practitioners and small firms being targeted? Surely the SRA visits should be entirely random?

The SRA states that it 'adopts a risk-based approach to regulation', and firms are mainly targeted based on their risk profile. Information comes from a wide range of sources, including the SRA's own dealings with firms, clients, media review, the police and other solicitors; the latter being the largest source of information.

The information is then filtered through a risk assessment process by which points are given for various risk categories. The firm is then given a final score and prioritised and dealt with accordingly. The problem with the process, as it stands, is two-fold:

Firstly, the risk categories and associated weighting are derived from the SRA's previous experience of regulating solicitors. As the majority of their cases to date have centered on small firms, and most risks associated with larger firms have not been identified, the risk assessment process is skewed so that smaller firms are more likely to be targeted.

Secondly, the process allows for bias. The report states that 'in those areas of decision-making where subjectivity and discretion prevail, there is evidence of some stereotyping being applied'. The SRA is a predominantly white organisation, especially at the decision-making level. In an ideal world this should have no effect on the regulation of solicitors.

However, with significant media coverage of issues such as terrorism and gun crime, it is hardly surprising that some SRA employees may have certain preconceptions of BME solicitors. This only assists further with the SRA targeting firms with BME solicitors.

The SRA states that the public has a right to expect them to focus their resources on the solicitors and firms that are most likely to harm the public's interests.

While this makes sense, it does allow the 'not so obvious' culprits to slip through the risk assessment net thereby saving them from being subject to an SRA visit or investigation. While smaller firms are more likely to have weaker risk management systems and less time and resources to know all of the professional rules, larger firms are also vulnerable to non-compliance, sometimes with potentially more damaging effects.

The regulation of law firms is now the subject of a Law Society review, led by Lord Hunt of Wirral (SJ 'news' 152/41, p7). The need to promote equality and diversity forms part of the terms of reference as well as exploring whether the present regulatory regime is appropriate for the larger corporate firms. The recommendations will be awaited with interest.

In the meantime, change of attitude and approach is required. The SRA expects law firms to not only have policies and procedures in place (including of course an equality and diversity policy) but also to ensure that there is evidence that such policies are being put into practice. For it to have any credibility as a regulator, it needs to do likewise.

The SRA has published its strategy, which is now subject to a public consultation and that closes on 23 December 2008. It is hoped that it does more than pay mere lip service to this important issue and acts swiftly to remedy the problems that lie within.