SRA urged to rethink penalty regime

The Law Society of England and Wales has expressed strong opposition to the Solicitors Regulation Authority’s (SRA) consultation on a new financial penalty regime, urging a complete re-evaluation of the proposals. According to the Society, the framework is potentially unlawful, confusing, and inconsistent with the Legal Services Act, undermining the authority of the Solicitors Disciplinary Tribunal (SDT) without adequate justification.

One of the primary concerns is the SRA's aim to implement a uniform framework for all types of misconduct. This approach conflates separate issues and may lead to confusion, especially since the SRA has unlimited fining powers in cases of economic crime but limited powers for other misconduct affecting traditional firms and individuals.

Richard Atkinson, vice president of the Law Society, stated, “The Law Society maintains its strong opposition to the SRA’s ambitions for any further extension to its fining powers.” He stressed that higher fines do not necessarily act as a credible deterrent and criticised the lack of empirical evidence backing the SRA’s claims that increased penalties would maintain public trust.

Atkinson also criticised the introduction of two new penalty bands, arguing that there should instead be a specialised framework for economic crime that allows for a more nuanced approach. He warned that the proposed minimum fines could disproportionately affect smaller firms and individuals, potentially leading to closures and increased financial strain.

The Law Society emphasised the importance of open justice, advocating for public attendance at disciplinary proceedings to ensure transparency. They argue that the existing role of the SDT satisfies this need, whereas the SRA’s proposals do not.

Atkinson concluded with a stark warning about the implications of the SRA’s proposals: “Large fines imposed on legal aid firms could lead to firms closing down, which would have a detrimental impact on access to justice and vulnerable members of the public.” He cautioned that such changes could create legal aid deserts, further limiting access to essential legal services.

The Law Society is calling for the SRA to rethink its proposals, ensuring that any modifications to the financial penalties framework are both proportionate and transparent. They also argue that it is premature for the SRA to seek additional powers until investigations into its previous handling of cases have been completed and lessons learned.