What's a reasonable maximum fine?

Like a lot of important subjects in legal life, the issue of what the SRA's powers to fine solicitors is a rather dull one, right up to the point when it is potentially you on the receiving end. Last week the SRA produced both good and bad news. The good news was that the SRA had finally dropped its long-running attempt to increase its in-house fining powers from £2,000 to £250m. However, the bad news was that, in its latest consultation paper, it is bidding to increase its fining power to a theoretical maximum of £100,000. So, what should happen?

No strong case

First, a quick re-cap on the complicated issue of what solicitors can be fined, by whom, and in what circumstances. The maximum fine which the SRA can impose, without referring the matter to the Solicitors Disciplinary Tribunal (SDT) is £2,000. The Legal Services Act ushered in a huge variation to this, as far as alternative business structures (ABSs) are concerned, where the maximum leaps to £250m per firm and £50m for an individual. If the SRA decides to refer a case to the SDT then the tribunal's fining powers are unlimited.

In October of last year the Ministry of Justice (MoJ) rejected the SRA's attempt to increase the maximum level of fines for traditional firms to the same level as that for ABS, saying that "We do not consider that a strong enough case has been made to change the current fining powers by such a large amount". Nevertheless, even opponents of the change, such as the Law Society, seem to agree that the differential between the two sets of powers needs some rationalisation. The society has argued, with some sense, that parliament's decision to set the limit at £2,000 suggests that "any further rise should bear a reasonable relationship to this figure".

So, all that's left for us to decide is what figure, or formula, is reasonable in these circumstances? There is no obvious middle ground in the difference between £2,000 and £250m, the latter figure is clearly designed to deal with major offences committed within a large corporate ABS. The level probably exceeds a level that could be fair to even the very largest of City law firms and only make sense when considered in the context of multi- national conglomerates. If, however, we look at the levels of fines imposed on traditional law firms by the SDT, perhaps this can guide us towards a compromise on the level of the SRA's internal powers. The huge majority of SDT fines are below £10,000 and only once, since it received its powers to levy unlimited fines, has it imposed a fine as high as £50,000.

Functional separation

The recent SRA consultation paper on the subject floats the possibility of maximum fines set at anything between £10,000 and £100,000. It is clear that the regulator's own preference would be at the high end of this range, the argument being that this would improve efficiency and consistency. The SRA is also understandably keen to counter concerns about the independence of disciplinary decision makers by underlining their functional separation from other SRA staff. Any internal fine, it is proposed, would also be appealable to an adjudication panel and the SDT. So which figure bears a reasonable relationship to £2,000? I would argue that it is difficult to see how a figure above £50,000 could be justified. If that figure '¨is the highest amount that the SDT has chosen to fine anyone in the last four years, then any reason for the SRA to ask for more seems self-serving and slightly pointless. Even if that level were agreed though, I suspect that the SRA would again ask for more within '¨a couple of years. SJ

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