19 September 2011

Revealed: SRA mulls leniency scheme for law firm whistleblowers

The Solicitors Regulation Authority (SRA) is formulating a whistleblowers’ charter and leniency scheme for those who reveal misconduct at law firms and alternative business structures, Legal Futures can report.

Co-operation will be accepted as mitigation, with a draft policy being considered tomorrow by the SRA’s compliance committee saying this may be “particularly substantial if the witness is the first person to disclose the behaviour of concern or to provide cogent evidence of it”.

The aim is to encourage disclosure, and though elements of the scheme are available through existing practice and procedure, the draft policy says it “would be particularly beneficial in providing transparency both for those who might wish to take advantage of it but also our staff and stakeholders as to how the scheme might work”.

The draft policy requires full disclosure and ongoing assistance, including giving evidence if required. The witness will be expected to enter into a regulatory settlement agreement or a similar written arrangement, including full admission of any wrongdoing and a declaration that full disclosure has been made. Providing redress to victims will also mitigate the wrongdoing.

Legal director David Middleton told Legal Futures that the SRA already receives a lot of information via its red alert line, but that transparency would help. “For the person who’s really worrying or doesn’t know what to do but wants a difficult situation to come to an end, they will be able to see what they can do and what the outcome could be,” he explained.

Mr Middleton acknowledged that a debate was needed, given that some argue such schemes allow wrongdoers to get away with their misconduct. However, he pointed to value the Financial Services Authority, Office of Fair Trading and European Commission place on leniency schemes, with figures obtained by the SRA under the Freedom of Information Act revealing that the Office of Fair Trading has accepted 93% of the 156 applications made under its scheme in the last six years.

“It is very clear that both the UK and EU competition authorities consider that leniency programmes are extremely important and very effective in ensuring that information is disclosed to enable action to be taken against unlawful cartels,” the SRA says.

By Legal Futures

Tags: compliance, Financial Services Authority, Office of Fair Trading, Solicitors Regulation Authority, whistleblowing