SRA intervention powers and challenge threshold

IPS Law LLP & Anor v SRA [2026] EWHC 1124 (Ch) is a recent case involving a challenge to an Solicitors Regulation Authority (SRA) intervention. The underlying facts involved suspected dishonesty directly related to the holding of client money. It is not particularly surprising that the High Court upheld the intervention as the SRA was able to point to letters from the firm stating that funds were in client account when they had already been partially disbursed. 

The case is a reminder of points which are of wider importance as the SRA appears more willing than ever to pursue an intervention. It, now infamously, intervened into three firms following the Daily Mail “sting” article in July 2023. Three firms were destroyed, and solicitors effectively suspended from practice for years even though they were ultimately fully exonerated by the SDT – a situation which has never previously occurred. 

The intervention regime

Interventions are the SRA’s “nuclear weapon”. Undoubtedly the SRA’s most draconian power, all the SRA needs to show to establish a statutory gateway to intervention is a reason to suspect dishonesty. That is acknowledged to be a low threshold – other statutory gateways require rather more certainty but they tend to be more rarely used as justifying interventions. 

For those not familiar with the regime, intervention broadly involves the SRA seizing funds and files from a firm, usually using a solicitor agent. It is costly, time consuming and immensely disruptive to clients. It will usually cause the firm to close – although that is not its primary purpose. 

The intervention regime was established at a time when solicitors worked exclusively on paper, incorporated practices did not exist, the profession was self-insured and non-lawyer involvement in firms was unthinkable. The profession, corporate regulation and society have moved on. Almost 75% of firms are incorporated practices, either companies or LLPs. That statistic has been growing year on year for some time. A further 15% of the regulated population is sole practitioners – a statistic which has been shrinking and just over 10% is “traditional” partnerships. 

Challenging intervention

Firms will usually be given notice of the intention to intervene and an opportunity to make representations. However, the SRA is not obliged to give notice if it considers that it is not in the public interest to do so. This means that, on the mere suspicion of dishonesty, firms could find the SRA showing up with a large van to take away their business without any notice. It’s rare but it does happen. More often, firms will be given the opportunity to make representations, albeit within a relatively curtailed timeframe which may be as little as 48 hours. 

Once the SRA has issued a notice of intervention, any challenge is notoriously difficult for both practical and legal reasons. It is not usually particularly difficult for the SRA to demonstrate that there is reason to suspect dishonesty  - not least because the assessment is undertaking at the hearing and the SRA may have had unfettered access to the firms’ documents for weeks or months by then, allowing it time to shore up its case. The intervened firm, on the other hand, will have no access to its own files and will be reliant on requesting information from the SRA or witness evidence based on memory to establish its case. 

Intervention is often based on perception of risk, rather than factual findings and it is relatively easy for the SRA to argue that any suspicion of dishonesty is sufficiently serious to require a regulatory response. The low statutory threshold for interventions reflects the measure of trust given to the regulator in the statutory scheme which is predicated on the regulator only taking action which is proportionate and necessary. 

8 day deadline

The logistical problems of having to act extremely quickly to file a Part 8 claim within 8 days in circumstances where accounts and access to funds has been frozen are also material reasons why firms may not be able to challenge an intervention. IPS confirmed that the court has no power to extend the statutory 8-day deadline. If you miss it, there is no alternative route to challenge an intervention decision. 

Bizarrely, the Court had terrible difficulty in IPS in establishing when the 8-day time period started. The SRA had emailed the intervention notice to the firm the day before it attended to effect the intervention. However, it was argued that email was insufficient service and that time should be calculated from deemed postal service two days later. It is not especially clear from the judgment why it was not possible to establish the date of service with certainty but anyone seeking to challenge an intervention would be well advised to be very clear on when time starts to run and ensure that the challenge is filed within the time limit. 

Time for change?

There are widespread calls for reform of legal regulation from almost all stakeholders. The LSB. Law Society, professional bodies and client representatives all point to recent failings as indicating the need for reform. 

The SRA has stated that it recognises the issues and is looking at reprioritising its approach to enforcement in light of high profile, high impact cases such as Axiom Ince, SSB and PM Law. All of those cases ended in very costly interventions and massive disruption for clients, creditors and employees. 

It is difficult to comprehend the devastation that intervention causes. Although it should be the lesser of two evils, questions must be asked as to whether, in light of changes to the structure of practices, intervention remains an appropriate regulatory tool. Would, for example, clients be better served by a process more akin to administration where the officers of a corporate entity are replaced by statutory roleholders with the specific intention of improving the outcomes for clients? Could firms be required to appoint a solicitor manager to oversee practice while the SRA completes its investigations? Should the profession look at a version of the FCA’s skilled person regime to mitigate risk? 

In 2026, I find it hard to believe that we cannot design a better option than intervention to mitigate regulatory risk. We no longer live in the paper and chequebook world of the 1970s. Regulators have access to phenomenal amounts of data and should (in theory) be able to take much more proportionate and targeted steps to address risks. It would also help, of course, if investigations were streamlined and completed much more quickly and efficiently.  

For a start, the recent spate of interventions, including of multiple consolidator firms, should enable significant work to be done to establish how clients were served by the intervention process, what they made of their experience with the SRA, the delays and personal impact they suffered. I would guess that many will have formed the view that there must be a better approach. 

The SRA could use digital and AI tools to model the development of the risks in the intervened firms to better understand where the pinch points were and what caused the issues leading to intervention. There has been some analysis of how the SRA came to miss warning signs but no real root cause analysis into why the issues occurred in the first place. Informed observers may speculate but there is no substitute for genuinely informed evidence based conclusions.