There has been a 25% fall in the number of law firms closed down by the Solicitors Regulation Authority (SRA) in the past year, new figures have revealed.
The SRA’s quarterly performance report shows that in the year to 30 June 2013, 38 firms were closed down – mostly sole practitioners – compared to 51 in the previous 12 months.
Only one firm with more than four partners was closed down.
A third of interventions involved reasons to suspect dishonesty, up from a quarter. Protecting the interests of clients and accounts rule breaches were the main reasons given for interventions.
The downward trend comes despite the cost of interventions rising. Earlier this year, the SRA bolstered its intervention fund having closed down some larger firms. It had budgeted £1.3m for 2013 but then revised it to £7m.
The report showed that the economic pressures on law firms manifest themselves in the rising number of allegations the SRA received over issues such as debts, financial difficulties, and bankruptcy/administration – all of which have gone up in the past year.
Nearly half of reports received by the SRA were risk rated as red (22%) or amber (25%).
The performance report also showed that the number of solicitors before the Solicitors Disciplinary Tribunal fell by 10% in the year to June 2013, to 253. However, within that there was a 55% increase in those who were struck off, from 55 to 85, making it the most common sanction applied by the tribunal over that time.
The SRA can now issue a fine of up to £2,000, which was seen as a way to reduce the number of lower-level offenders being sent to the tribunal. However, it scarcely used the power during the year – just three times in the 561 cases where it upheld allegations made against firms or individuals. It also issued 21 warnings.
Instead the SRA mostly sent letters of advice (73% of cases), but in 12% of cases it referred the matter to the tribunal.