The government has rejected the Solicitors Regulation Authority’s (SRA) bid to increase the amount it can fine law firms from £2,000 to £250m, Legal Futures can reveal.
The SRA had wanted its powers to penalise ‘traditional’ firms to match those it already has for alternative business structures (ABSs), where it can also fine individuals up to £50m.
The disparity was on show last week with publication of a draft supervision and enforcement strategy for the ban on referral fees that listed the penalties offenders could face.
The MoJ conducted a small consultation with stakeholders over the issue, and a spokeswoman told this website: “We do not consider a strong enough case has been made to change the current fining powers by such a large amount.”
An SRA spokesman said it continued to believe that there should be a level playing field. “While the MoJ has said no to our proposal at this stage, it has allowed for the possibility of further proposals that narrow the gap between traditional firms and ABSs, which we will continue to look at.
“In the long run, our proposals would also benefit firms that have committed breaches which deserve a punishment more substantial then a £2,000 fine but are not so serious as to warrant a suspension or strike-off. Our average costs for an SDT case are around £8,000 [which are usually ordered against the respondent solicitor], so when you consider the time it can take for a tribunal appearance to be heard, firms would be far better off being fined directly by us if the fining powers were increased.”
A Law Society spokeswoman said: “While the society recognises that the SRA’s powers as between law firms and ABS firms needed rationalising, their proposals to the MoJ may have gone too far.
“We recognise that in some cases the SRA’s fining powers may not be sufficient. In such situations they can refer a case to the Solicitors Disciplinary Tribunal who have unlimited fining powers. This system ensures there is a clear separation between investigators and adjudication in cases where a substantial fine is to be imposed.”