The Solicitors Regulation Authority (SRA) is working to activate its power to issue unlimited fines in cases involving economic crime, it has emerged.
The regulator is also to change its approach so that solicitors convicted of drink driving no longer receive financial penalties.
The moves come as the SRA continues to rethink the revised fining guidance it issued for consultation last year, which received a strong backlash from the profession.
Briefing the media yesterday following the most recent meeting of the SRA board, chief executive Paul Philip conceded that the draft guidance had been too prescriptive.
The SRA is currently working with the Solicitors Disciplinary Tribunal (SDT) to explore the extent to which they can align their respective regimes, meaning that its plan for a second consultation on further amended fining guidance will be delayed until later in the year.
As a result, it is separating out two elements of last year’s proposals so it can move forward with them more quickly.
The SRA’s power to issue unlimited fines in relation to economic crime was granted under the Economic Crime and Corporate Transparency Act 2023 and came into force in March 2024. However, the SRA has first to issue guidance on how it will apply the power and have this approved by the Legal Services Board (LSB).
A paper before the board said this required only “technical” changes to the existing guidance so as to reflect the legislation and did not amount to a change of policy.
As a result, the LSB has advised these changes are “likely to be suitable to be approved through an exemption to its formal process”, speeding up approval considerably, although it will not be sure of this until the formal application is made.
The SRA is nonetheless to carry out a limited consultation with the key stakeholders that responded to last year’s consultation: the Law Society, SDT, City of London Law Society, and Liverpool, Manchester and Birmingham local law societies. It will also approach other local law societies.
Asked by Legal Futures if the SRA should have acted more quickly to activate this power, given the government’s focus on tackling economic crime, Mr Philip said they had wanted to consult on the whole package of fining reform.
Last year’s consultation also proposed no longer imposing financial penalties for drink-driving convictions. Instead, it would issue a warning or rebuke, or – where this was not sufficient, such as in case of repeated criminal behaviour or with serious aggravating factors – refer solicitors to the SDT.
There had been concern over some hefty penalties handed out to solicitors given that they had already been convicted in court.
A majority of respondents agreed with this change and the SRA said it had decided to implement it, as it did not require LSB approval, although decision makers will still be able to impose a fine in “exceptional circumstances”.
The new guidance says it may also be relevant to driving whilst under the influence of drugs, but that there are additional considerations in such cases because taking illegal drugs is in itself against the law.
The board paper said: “We do recognise however that there may be other types of conduct for which a financial penalty may usually be inappropriate.
“We reviewed our approach to drink driving because of stakeholder feedback and because we had published specific guidance about our approach to determining the appropriate sanction in these cases.
“Subject to resource prioritisation, we may in the future want to review whether there are other types of misconduct for which it would be helpful to clarify our approach to determining the appropriate sanction.”
Finally, one of last year’s proposed reforms was to open the way to using global, rather than domestic, turnover as a basis of calculating a fine for a firm. The SRA has decided not to proceed with this following consultees pointing out the complexities involved.
“The fairness and legality of taking into account non-domestic turnover was called in question,” the board paper said.
“Whilst some global entities will have a UK branch, others will have established their England and Wales business as a separate entity. Some queried whether it is right either in principle or in law for us to calculate fines based on global turnover, particularly in circumstances where the regulated entity is not owned by the overseas entity or entities.”
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