SRA plans for 73 per cent rise in interventions
Warning that large and medium-sized regional firms could feature
The SRA is planning for a big rise in interventions, from 37 to 64, for this year 'and each year thereafter'.
Interventions reached a peak of 97 in 2009, before falling to 64 in 2010, 62 in 2011 and only 37 last year.
However, in papers for tomorrow's SRA board meeting, the regulator said it was particularly concerned that large and well-established firms could feature among the latest casualties.
"A particular concern is the failure of large firms (such as Cobbetts) or well-established firms (such as Blakemores and Atteys) which is a new feature in the legal services market," the SRA said.
The regulator said that "problems with the accounts of firms of that type have been seen and there is a risk that one will fail". It added that even if there was not a shortfall on client account, "the disorderly failure of a large firm including unreliable accounts" could lead to the Compensation Fund having to make "substantial payments".
The SRA board approved a consultation on transferring the cost of interventions from its annual accounts to the Compensation Fund at its meeting in April when it emerged that £2.2m had been spent on interventions this year, including £1m for Atteys and £800,000 for Blakemores.
This was more than the total cost for the previous year and the SRA has now estimated that the total cost for this year at almost £10m.
It said that this would mean asking solicitors for £13.4m in contributions from the Compensation Fund, resulting in an indicative fee of £56 for individuals and £836 for firms holding client money.
However, the regulator said that even if the cost of interventions was not transferred, it would recommend contributions of £10 for an individual and £150 for a firm.
It pointed out that indicative fees were higher last year, at £92 for an individual and £1,340 for firms.
In a statement today, the regulator said none of the 24 responses to its consultation on the cost of interventions proposed an alternative course of action, though they did raise concerns about the cost to well-managed firms.
Richard Collins (pictured), SRA executive director of policy, said: "When considering the response, it is important to remember that whichever solution is decided upon, it is the profession that ultimately carries the cost of interventions.
"In the future, all matters that have been raised will undoubtedly be covered by both the wider fees review and compensation arrangements review."