The Solicitors Regulation Authority’s (SRA) new fining powers mean that significant but inadvertent breaches need no longer be referred to the Solicitors Disciplinary Tribunal (SDT), the pair have agreed.
But equally there are certain types of cases that should go to the SDT irrespective of the SRA’s powers, such as allegations of sexual misconduct, racism, bullying and harassment.
Last year, the SRA’s fining power for traditional firms was extended from £2,000 to £25,000; it can already fine alternative business structures up to £250m and the individuals within them £50m.
As a result, the regulator and the SDT this week issued a joint statement outlining their “shared expectation” of the types of case the SRA would deal with and those that would be referred to the SDT.
On the former, the statement said it “might now be able to deal with cases at a higher level of seriousness than previously”.
It continued: “For example, these cases might involve a breach of the SRA’s accounts rules with personal culpability, but with no deliberate intention to misappropriate money or personal gain.
“There might also be principle breaches related to serious poor practice, recklessness or a failure by omission, although it would be unlikely to deal with cases that involve wilful disregard of rules of practice or professional obligations.”
While there was a clear class of case that would continue to go to the SDT – such as those that would lead to a strike-off, suspension or heavy fine if proven – the statement also identified cases that that would be best heard by the tribunal, irrespective of whether the SRA has relevant sanctioning powers.
A lengthy list of examples included:
- Cases that are of high public interest or involve a novel point of law;
- Cases involving allegations of sexual misconduct, racism, bullying, harassment or other counter-inclusive misconduct and/or conduct that targets an individual because of a protected characteristic;
- “A failure by a law firm to take appropriate steps to protect an employee from counter-inclusive misconduct, or to ensure a safe working environment (for example, where there is evidence of a pervasive toxic culture)”;
- A serious failure by a law firm to comply with the regulatory framework resulting in harm to individuals (either clients or employees); and
- Cases involving significant and/or manifest incompetence or recklessness, including where there has been serious misconduct by others.
The SRA and SDT said they would likely need to update the statement if and when the Economic Crime and Corporate Transparency Bill comes into force.
As currently drafted, it gives the SRA unlimited fining powers in cases of economic crime and introduces a new regulatory objective for the Legal Services Act 2007 that will require the profession’s regulators to promote the prevention and detection of economic crime as a distinct priority.