SRA proposes to increase maximum fines from £2,000 to £25,000 or 5 per cent of annual turnover

The Solicitors Regulation Authority (SRA) has launched a consultation on proposed changes to financial penalties for law firms and solicitors that fall short of the expected professional standards.

The SRA has said it wants to resolve cases “much more quickly”, improve public protection and save time and costs for all parties, as well as reduce stress for the profession.

The consultation seeks views on proposals to:

• Increase the maximum fine the SRA can issue from £2,000 to £25,000;
• Take into account the turnover or income of firms and individuals when setting fines;
• Introduce ‘fixed penalties’ of up to £1,500 to enable lesser issues to be dealt with efficiently.

Currently, the SRA can only issue fines to traditional law firms, or individual solicitors, of up to £2,000. However, it has unlimited fining powers in respect of alternative business structures.

The regulator said increasing its fining threshold would mean a broader range of disciplinary matters could be dealt with by the SRA, without the need to refer matters to the Solicitors Disciplinary Tribunal (SDT).

The SRA said this would mean cases could be resolved quickly and potentially reduce the costs, resources and stress associated with a hearing. It would also leave the SDT with more capacity to progress the most serious cases.

The SRA has proposed that it be permitted to fine firms up to 5 per cent of annual turnover in the most serious cases. In respect of individuals, it has suggested income should be taken into account when setting fines. This would mean fines for the same offence would be different, depending on the lawyer’s level of income – a junior solicitor would receive a lower fine compared to an equity partner, for example.

The introduction of “fixed penalties” for certain “lower-level” misconduct would allow less complex issues to be dealt with more efficiently, and would provide greater transparency and consistency in how penalties were applied.

Rights to appeal the outcome of any SRA decision and penalty imposed by the SDT would not change.

The consultation will consider “a more robust approach” to serious misconduct, to ensure sanctions are “consistent” and “act as an effective deterrent across the whole of the legal profession”. For example, the Bar Tribunals & Adjudications Service has recently proposed to issue automatic suspensions in cases of sexual harassment, in addition to financial penalties.

The SDT has faced criticism in recent years for a raft of seemingly harsh decisions, particularly in relation to junior lawyers. The SRA has said it is committed to working with other regulators to achieve “the right balance” for its approach to enforcement.

Chair of the SRA, Anna Bradley, said: ‘‘We know that the overwhelming majority of solicitors and firms do a good job, providing high-quality legal services to the public, and meeting the standards we set. But when those standards are not met, we need to step in to make sure that consumers are protected and confidence in the profession is well placed. 

“Our proposals are designed to resolve issues much more quickly, saving time and cost for everyone and, importantly, reducing the inevitable stress for those who find themselves in our enforcement processes. Changes to our fining powers would also allow the Solicitors Disciplinary Tribunal to focus on the most serious cases where there is need for greater fines and sanctions such as suspension and strike off”.

She added: “This is a real opportunity to update our enforcement approach and we would welcome views from across the profession, other regulators and more widely.”

The consultation will close on 11 February 2022.