LSB rejects call to make Axiom Ince review independent

Viall: Interest of clients important in decision about compensation cap

The Legal Services Board (LSB) has firmly rejected a call from five local law societies to make its review of the Axiom Ince scandal independent.

Danielle Viall, the LSB’s general counsel, also questioned their criticism of the Solicitors Regulation Authority’s (SRA) decision not to engage a rule that would allow it to impose a £5m overall cap on claims arising from Axiom Ince.

Last month, the LSB announced it would conduct a review of regulatory events leading up to the SRA’s intervention into Axiom Ince. It has retained a Northern Irish law firm to assist.

In a letter on behalf of the so-called Joint V – the local law societies of Birmingham, Bristol, Leeds, Liverpool and Manchester – Liverpool Law Society president Gaynor Williams cited the comments of LSB chief executive Matthew Hill to the House of Commons justice select committee earlier in December, when he described the SRA as the “most sophisticated, mature, best-resourced and arguably most effective regulator in our sector”.

Ms Williams wrote: “Having expressed such a view, we believe that the confidence of the public and the profession in any review requires that it be independent of the LSB as well as the SRA.”

Ms Viall – who is leading the LSB’s work on Axiom Ince – said the oversight regulator did not agree.

She pointed out that Mr Hill also made “clear reference to the LSB’s view that the SRA needed to improve in key areas” during his comments.

“In addition, those remarks that you have chosen to focus on are a combination of fact and objective assessment by the oversight regulator and will be recognisable from the LSB’s published performance assessments.

“Taken together, Mr Hill’s remarks on this topic do not constitute, as you seem to be implying, any reason not to have confidence in the LSB’s ability to carry out the review we have begun with anything other than objectivity, independence and transparency.”

On the cap, Ms Williams argued that section 28 of the Legal Services Act 2007 required the SRA to exercise its power in a manner which was proportionate.

Given the possible loss of up to £66m from Axiom Ince, some or all of which could fall on the SRA Compensation Fund, “we are unable to see how failure to impose the cap where the claims may exceed it by 13 times might be proportionate”.

Ms Viall said that while the decision was a matter for the SRA “in the first instance”, the LSB did not agree that proportionality should be judged purely in terms of the relative or indeed absolute scale of potential payouts.

“There is an important further term to the equation, so to speak, which is the impact on the individuals and businesses of the alleged misconduct of the solicitors involved. Those individuals and businesses have done nothing wrong but many now find themselves in financial hardship, in some cases extremely so.

“It would be surprising to us if that dimension were absent from a consideration of whether a cap should be applied.”

Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Why private client solicitors should work with financial planners – and tell their clients

Ever since the SRA introduced the transparency rules in 2018, we have encouraged solicitors to not just embrace the regulations and the thinking behind them, but to go far beyond.

A paean to pupils and pupillage

To outsiders, it may seem that it’s our horsehair wigs and Victorian starched collars that are the most unusual thing about the barristers’ profession. I would actually suggest it’s our training.

Five ways to maintain your mental health at the Bar

Stress, burnout and isolation are prevalent concerns for both chambers members and staff. These initial challenges may serve as precursors for more severe conditions, such as depression and anxiety.

Loading animation