The number of law firms closed by the Solicitors Regulation Authority (SRA) rose by 35% last year to 50, it has emerged.
The increase was fuelled by steep rises in rule breaches, particularly those relating to accounts and indemnity insurance, according to the SRA’s annual review for the year ending 31 October 2017.
Interventions were up from 37 to 50, the highest level for three years.
The review said: “After a sharp fall in 2010/11, the number of interventions has settled at a relatively constant rate for five years.
“Although the number of interventions we carried out in 2016/17 increased, it is still around the historical average for the past five years.”
The number of solicitors struck off by the Solicitors Disciplinary Tribunal (SDT) fell last year, from 75 to 59, while the level of fines and suspensions was broadly similar.
The SRA said the big increase in 2015/16 “was the result of a full case review that we carried out, the effects of which we are still seeing now”.
The number of agreed outcomes – where the solicitor makes admissions and agrees a set of facts, sanction and costs – fell sharply from 23 to 12.
Grants made by the Compensation Fund were up by almost £5m last year, from £10.3m to £15.2m, but lower than the previous figure of £17.8m.
Claims on the fund involving property sale proceeds were the most common, at £4m, followed by probate (£3.3m), deposits (property and other) at £2.6m and claims involving personal injury damages and mortgage fraud (both on £0.8m).
The total number of compensation claims was 2,174 and the average value of a claim was £22,000.
The SRA said it received 35,000 ethics queries in 2016/17. The top five concerns were confidentiality and disclosure, the accounts rules, validity of practising certificates, retainers with clients and conflict of interest.
The SRA received 11,879 reports of bad behaviour by solicitors or firms during the year, a rise of over 5%.
The top three issues were incompetent, negligent or delayed client care, taking unfair advantage of a third party and identity theft – either of a person or a firm, including cloned websites.
The top three issues reported by solicitors were identity theft, breaches of confidentiality, and incompetent or negligent client care.
Enid Rowlands, chair of the SRA board, said: “The year ahead will bring with it new challenges and opportunities, notably the UK’s departure from the European Union.
“This is why we have made a commitment in our Corporate Strategy 2017 to 2020 to making sure our regulatory arrangements work as effectively as possible in the context of any new relationship with the EU.”