Reports of solicitor dishonesty have almost doubled in the past two years as economic pressures start to bite across the profession, the Solicitors Regulation Authority revealed today.

Samantha Barrass, executive director (pictured), said the immediate risk of financial instability was leading some to take chances with client funds.

Barrass was speaking at an event in Birmingham as the SRA published its first annual assessment of risks to the profession.

‘When market conditions are tough and financial problems begin to bite, individuals who are usually principled and ethical can succumb to pressures and temptations, getting drawn into dishonest practices that put their clients, their businesses and their future at risk,' she said.

‘These actions, often a consequence of financial strain, are a real and present danger.’

The event heard that, over the past five years, 30% of all interventions involved suspected dishonesty and nearly half included breaches of the accounts rules.

The SRA wants its Risk Outlook, outlining how the authority views key risks, to ‘provide firms and consumers with a clear view of the SRA's assessment of the drivers in the legal services market and the key risks, current and emerging, to the provision of competent ethical legal services’.

The outlook places risks into three categories – current, emerging and potential. An example of a current risk is financial instability.

Barrass added: ‘Neither we nor the firms we regulate can eliminate risk altogether, and indeed we should not, because well-controlled risks are a feature of a healthy market.

‘Instead, our objective is to make the best use of our limited resources to support the reduction of harmful risks to an acceptable level.’

At the same event, SRA executive director Richard Collins said many law firms are looking at merging in order to make cost efficiencies and to increase their market share – but these can present their own dangers.

‘Effective mergers can lead to innovative and more efficient business, but to ensure they are viable they also require careful management, due diligence and planning. Poorly executed mergers and acquisitions are key drivers of risk.’