SRA aims to bring maximum fines for law firms closer to the much higher figures for ABSs
Further tensions in the Law Society’s already strained relationship with the Solicitors Regulation Authority (SRA) emerged in January as the representative body prepares to contest its regulatory arm’s attempt to increase its fining powers over law firms.
In a consultation that ends this month, the SRA has invited views on its proposal to increase the current level of fining powers over City and regional firms to as much as £100,000. However, the Law Society 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 £2,000 is appropriate for misconduct or breaches of regulatory requirements.
The SRA estimates disciplinary matters that involve a fine being imposed or agreed to by the SRA, rather than the SDT, would generally be resolved ten months quicker and could save solicitors £8,000 in legal costs.
‘The Law Society does not believe this is the right time for the SRA’s fining powers to be increased.’
Law Society spokesman
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.’
Vote of no confidence
December’s high-stakes vote of no confidence in the Law Society’s leaders, president Nicholas Fluck and chief executive Desmond Hudson, in which the society lost the vote by 228 to 213, has elicited no further response from the body since the immediate aftermath of the vote, when it reaffirmed its vow to ‘continue opposing cuts that will risk the livelihoods of criminal solicitors and jeopardise the quality of criminal defence in England and Wales’. When asked how the Law Society proposes to respond to the vote, a spokesperson told Legal Business it has bolstered its engagement programme with members. ‘These meetings between office holders and crime practitioners are informing the society’s position as we continue to produce clear evidence, such as the Oxford Economics report, against the proposed cuts and fight for further vital concessions for our members throughout January.’
However, a Law Society spokesman said: ‘The Law Society does not believe 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 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.