- Interventions into solicitors breaching account rules surge 175% to 11 from 4 in 12 months
- Interventions into solicitors suspected of being dishonest rose 14% to 16 from 14 in 12 months
Closures of law firms by the SRA (Solicitors Regulatory Authority) for breaches of accounting rules have more than doubled in the last year from four to 11. SRA closures, via ‘interventions’, for suspected dishonesty also rose 14%, to 16 from 14 the previous year.
The SRA uses ‘interventions’ to shut down a law firm – temporarily or permanently – in order to protect client funds and interests. Under an intervention the regulator can seize documents and money, suspends lawyers’ practicing certificates, and launches a full investigation.
The sharp rise in these interventions follows the high-profile collapse of law firm Axiom, where more than £60 million in client funds was lost.
Andy Harris, Partner, says the sharp rise in interventions for account rule breaches and suspected dishonesty highlights the SRA’s determination to take a tougher stance in the wake of the scandal.
Says Andy Harris: “The collapse of Axiom has really spurred the SRA into action. They are going to look into problems with client accounts or allegations of dishonesty in much greater detail.”
The SRA is seeking to expand its regulatory powers under the Economic Crime and Corporate Transparency Act, allowing for greater flexibility in fining firms involved in economic crime. Most significantly, the SRA is pushing for greater powers to protect businesses – aiming for unlimited fines to cover all forms of misconduct not limited to financial breaches.
Andy Harris adds: “The proposals in the consultation paper are a very substantial step in increasing the SRA’s powers. If the SRA does get the powers to substantially increase the fines that it can levy, then law firms are going to have to increase the amount they invest in their internal compliance teams.”
*Year end October 31
The SRA steps up number of interventions into account breaches and suspected dishonesty
