Mayson: Warning was there
The collapse of the PM Law Group earlier this year was the “predictable outcome of a regulatory architecture built for a different market and a different time”, Professor Stephen Mayson has argued.
He said the collapse had exposed the shortcomings not only of the Solicitors Regulation Authority (SRA) but also the Legal Services Board (LSB), which lacked the power to change a regulator’s board.
The oversight regulator recently expressed disappointment at the “standard of leadership and accountability demonstrated” by the SRA board over PM Law, but said the Legal Services Act 2007 did not give it the power to determine the board’s membership.
Professor Mayson said what happened to PM Law “wasn’t a case of there being no warning: the warning was there, but the machinery to act on it in time wasn’t”.
He pointed out that it was at least the fourth time in six years that the SRA has faced a law-firm collapse “built on pretty much the same accumulator business model”: Metamorph (2022), Axiom Ince (2023), SSB Law (2024) and now PM Law.
“What we are seeing, in my view, is the predictable outcome of a regulatory architecture built for a different market and a different time and exactly what you’d expect from a framework that’s structurally adrift from the risks it now faces.
“That’s why this is not just a question of ‘the SRA should do better’: these collapses are not four isolated failures at one regulator.”
Instead there was a “systemic” gap between “what we have and what we need.”
In his independent review of legal services regulation in 2020, Professor Mayson called for a single regulator for all providers of legal services, whether legally qualified or not. He said it was time to move from regulating lawyers to regulating legal services, but to differing degrees depending on the risk to the public interest of the work.
In his first supplementary report in 2022 he said legal regulation was not protecting consumers from harm, both in their inability to access services and when things go wrong, meaning structural reform was more urgent than ever.
He followed this up with a second supplementary report in 2024, in the wake of the Post Office scandal, warning that lawyers had seemed to have forgotten that the public interest always outweighed any conflicting duties to their clients.
In a blog this week, Professor Mayson said the underlying regulatory weaknesses in each of the four firms he identified were “close to identical: information and actions were not joined up, investigations were too slow, and escalation to more senior people was too weak.
“These are not each examples of ‘unique circumstances’: the repetition is the pattern, not the exception.”
In response to the report on PM Law it published earlier this month, the SRA had “signalled the need to move from a largely reactive, enforcement-led approach to one that proactively uses data and intelligence to spot merging risks and allows it to act before harm occurs”.
However, the academic noted, the SRA had promised the same after Metamorph and then Axiom Ince, “and each time the promise didn’t bear fruit before the next collapse”.
This was why “the response has to go beyond the SRA, into the regulatory framework that keeps producing this cycle”.
Professor Mayson went on: “Title-based regulation missed an entity-level risk. All four of the accumulators that collapsed grew through the acquisition of existing firms into multi-entity groups. The SRA couldn’t aggregate the information it held across those entities.
“That’s a direct illustration of the argument for risk-based, activity-based regulation rather than a model built around individually titled and separately authorised practitioners and firms.”
Along with the SRA, the law firm collapses had exposed the weaknesses of the “oversight tier” of regulation.
The LSB’s remedies – directions, censure, performance targets – were “reactive and process-based; it explicitly lacks the power, for instance, to change a regulator’s board.
“This is a second-order illustration of the case for a single, sector-wide regulator to replace the current three-tier oversight/approved regulator/front-line regulator structure.
“The LSB’s constrained toolkit is itself part of the structural problem, not just the front-line regulator’s execution.”
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