Solicitors Regulation Authority updates enforcement strategy

Law firms and solicitors should be aware that the Solicitors Regulation Authority (the SRA) has recently updated its enforcement strategy. 

The updated strategy, published on 7 February 2019, aims to provide the public and profession with greater clarity on how the SRA decides whether to act in a given case and what factors it considers in deciding the seriousness of misconduct and what action to take. The strategy has taken some time to finalise and signifies the culmination of over three years’ engagement by the regulator. In this period, the SRA has considered the views of more than 5,400 members of the public and profession. 

Focus is on the following areas:

What is the correct procedure for reporting concerns?

The SRA highlights that solicitors and firms play an important role and are required by codes of conduct to report to the SRA promptly any facts or matters which they reasonably believe are capable of amounting to a serious breach of the SRA standards or requirements. The SRA states that reporting behaviour that presents a risk to clients, the public or the wider public interest goes to the core of the professional principles of trust and integrity. If you are an individual solicitor, or registered European or foreign lawyer, any obligation to make a report to the SRA will be satisfied if you provide the information to your firm's compliance officer on the understanding that they will do so.

What is the purpose of enforcement action?

The role of enforcement action is not primarily punitive.  Instead its role is:

• Protecting clients and the public: controlling or limiting the risk of harm and ensuring the individual or firm is not able to repeat the offending or similar behaviour, or is at least deterred from doing so
• Sending out a signal in order to prevent similar behaviour by other solicitors
• Maintaining and upholding standards of competence and ethical behaviour
• Upholding public confidence in the provision of legal services

What will be the SRA’s approach to enforcement?

Not every referral will lead the SRA to open an investigation. Some cases fall outside of its regulatory remit. The SRA will not need to take action solely to address a minor breach which is unlikely to be repeated and where there is no ongoing risk.

It will focus on the most serious breaches: either in isolation or because there is a persistent failure to comply or a concerning pattern of behaviour. A serious breach may include improper conduct falling short of ethical standards. It also includes other serious breaches of SRA standards or requirements - for example, those relating to failures of firms' systems and controls.

Even where the SRA has opened an investigation, it will not necessarily sanction all breaches, but will take into account the circumstances including any aggravating and mitigating factors, while ensuring that the wider public interest is upheld. 

If there is no underlying public interest concern, the SRA may decide to close matters without further investigation and, if appropriate, can close the case with advice which may include a warning that further breaches may result in a greater sanction being imposed in future. Constructive engagement with the SRA is very important.

What factors will affect the SRA’s view of seriousness?

The SRA will consider various factors including intent and motivation, impact on the victim, the client’s vulnerability, the solicitor’s role, experience and seniority, regulatory history and patterns of behaviour.  It will always investigate criminal convictions. These are not the only factors which may affect the SRA’s view of seriousness, and they do not all have to be present.

Mitigating features of a case which might indicate reduced or low future risk include:

• expressions of apology
• regret
• remorse
• no evidence of repetition of the misconduct, or a pattern of misconduct 

How will the SRA decide who enforcement action is taken against?

During an investigation, the SRA will consider the position of both the firm and the individuals working in that firm in order to reach an informed decision as to whom it should be seeking to enforce against.

The SRA principles set out the values all those regulated by the SRA are expected to uphold. There are separate codes of conduct and authorisation requirements for solicitors and for firms it regulates. Certain standards and requirements (e.g. relating to client accounts) apply solely to firms.

The SRA says it would take action against an individual where they were personally responsible. This addresses the risk they, as an individual, present to clients or to the wider public interest. It also ensures that specific action can be taken (such as striking off the Roll or imposing conditions on their practising certificate), to ensure that they cannot avoid accountability and/or repeat similar behaviour simply by moving firms. Further, firms may cease to exist, deliberately or otherwise, and therefore where an individual is directly culpable, the SRA will generally proceed against them in order to mitigate that risk. This is more likely where the practice is small and may, in effect, have no separation from its principal or partners.

The SRA will usually take action against a firm alone, or in addition to taking action against an individual, where there is a breach of the code of conduct for firms or of its other requirements.

How will the SRA assist staff in making the correct decisions?

The SRA has also made public a number of 'topic guides', which summarise the main mitigating and aggravating factors it will take into account when considering cases in a number of common areas. Intended to support SRA staff in reaching fair and consistent enforcement decisions, they serve as useful reference tools.

The guides focus on:

• Competence and standard of service
• Criminal offences outside of practice
• Driving with excess alcohol convictions
• SRA Transparency rules
• Use of social media and offensive communications

As the Transparency Rules came into force on 6 December 2018, this topic guide is particularly useful as a reminder to firms of their requirement to publish:

• Price and service information regarding specific common areas of law
• Details on the teams/individuals who will provide services in the specified areas
• Details of their complaints procedure, including how and when issues can be referred to the SRA or the Legal Ombudsman

What are the rules on reporting cases of potential misconduct?

Alongside the updated strategy, the SRA has also published proposed changes to the wording of rules regarding when firms should report cases of potential misconduct.

This is an important area for the SRA which receives around 12,000 reports of potential misconduct a year. Half of these reports come directly from law firms whilst the remainder come from the public, intelligence gathering and referrals from other authorities. The SRA publicly consulted on these rule changes last year, after it became apparent that law firms were interpreting the existing rules in different ways. 

The proposed rule changes make it clear that firms should apply their professional judgement to decide whether potential misconduct may have taken place and that they should then report the issues as soon as possible.

The rules also make it absolutely clear that nobody should face detrimental treatment for making, or proposing to make, a report.

Before these proposed changes to the SRA Codes of Conduct for Solicitors and Firms come into effect, the SRA will require approval from the Legal Services Board (LSB). The new SRA Standards and Regulations are then due to come into force in summer 2019.

Doyle Clayton’s regulatory expertise means we are well placed to support our clients in this area. Please contact Charlie Herbert or your usual Doyle Clayton contact to discuss how we can help you.