PM Law mess was foreseeable, but the SRA wouldn't listen

Cast your mind back to November 2024. A report has been published on the Solicitors Regulation Authority’s multitude of failings which allowed £64m in client money from the client account of Axiom Ince.

The SRA’s response was defensive bordering on indifferent. Chair Anna Bradley memorably told the regulator's annual compliance conference that, while there been mistakes, ‘in many respects that is history for us’.

In the very same month, we now know the SRA decided not to conduct an urgent forensic investigation into PM Law Limited, a network of firms snapped up and bolted on at a notable rate in the previous year.

The Jenner & Block report into PM Law, published yesterday, outlines that an investigation manager from the SRA had escalated ‘specific and serious concerns’ about PM Law in November 2024. The decision was taken by a forensic investigation manager not to commission urgent action but instead to arrange a non-urgent, standardised work programme for accumulator firms. 

An email from the junior investigator stated that the data showed ‘a concerning pattern and may be indicative of a wider concern at the firm’. It noted the wish to ‘act fast’ because the two newest reports of misconduct were ‘having a substantial impact on clients’.

The cumulative losses to the client account from Axiom Ince and PM Law are now £100m. Solicitors can expect their contributions to the compensation fund to rocket to cover the estimated £70m cost of claims.

While Bradley might have described issues with Axiom Ince as history, what is so frsutrating is that her organisation was making the exact same mistakes in the present – failing to join the dots and share intelligence to root out an obvious risk.

The Jenner & Block report says the failure to investigate PM Law reflected a ‘structural limitation in the SRA’s operational architecture’. In other words, the organisation was not set up to properly assess and respond to a disaster on the scale that was happening. The forensic investigations manager rejected urgent action because the issues with PM Law had been resolved and the firm had provided context and an action plan. The report revealed this was the manager's first experience of working in such a role and they had to learn ‘on the job’, with no formal training.

It was a failure in supervision, training, intelligence and collaboration. But most of all it was a failure of leadership – the immediate response of denial trickling down through the organisation and creating an air of complacency and caution.

There are signs that things are changing – albeit not yet enough for it to describe the PM Law issues as ‘history’. The SRA’s response this week to practitioners' concerns about separation of compliance officer roles suggested a regulator that is prepared to listen, communicate and adapt. Yet there is much more to do. Bradley described the PM Law report as making for ‘difficult reading’. That is so much more true when you consider the SRA had all the warning signs yet so little inclination to actually act on them.