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Large law firms ‘more likely to persuade SRA’ that clients not at risk

Intervention agent warns of big increase in regulatory action  

1 March 2013

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By Manju Manglani, Editor (@ManjuManglani)

Large UK law firms are less likely than small ones to face interventions by the Solicitors Regulation Authority (SRA), an intervention agent working for the regulator has said.

Speaking at Managing Partner’s annual Anti-money Laundering Compliance for Law Firms conference yesterday, Philip Barden, head of litigation and dispute resolution at Devonshires, said that small law firms were more vulnerable.

“A larger law firm is more likely to be able to persuade the regulator that its clients are not at risk,” said Barden, who has been an intervention agent for the SRA for ten years.

Citing the case of Christopher Grierson, who was jailed for fraud last year after making false or misleading expenses claims worth £1.2m at Hogan Lovells, Barden said that “if it had happened at a small firm, there would have been an intervention”.

He said that, because the international law firm responded swiftly and conducted a thorough internal investigation, the regulator was able to then “sit back” and trust the firm to ensure affected clients were protected and compensated.

“The regulator’s priority is that you demonstrate that your firm is in control at an early stage,” Barden said.

He predicted that there would likely be a “big increase” in the number of regulatory interventions in future, which have averaged at about 60 a year in the past ten years.

Barden added that the issue of insolvency in larger law firms could loom large in the next two to three years, following the recent demise of top-100 firm Cobbetts due to financial difficulties.

He noted that interventions by the regulator are usually made in response to reports of dishonesty, false accounting or insolvency.

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