Former civil servant Sarah Rapson has been announced as the Solicitors Regulation Authority’s new chief executive, although her start date has yet to be confirmed.
She will take over an organisation facing enforcement action of its own, under pressure from central government, struggling to retain the confidence of the profession and with uncertainty about what it wants to do with the client account rules.
The list of priorities is extensive, but here are just a few:
1. Draw a line under the Axiom Ince mess
The SRA has always insisted it wanted to move on from the Axiom Ince affair without showing any inclination to make that happen. An independent report found a catalogue of chances were missed to prevent some of the worst losses from the collapse of the firm, but the SRA’s main message has been that this is history. Such a response has inflamed rather than dampened anger over the regulator’s handling of Axiom Ince, and the new chief executive would be well advised to change the messaging to make it clear that mistakes were made but that lessons have been learnt. When the oversight regulator is issuing enforcement action and demanding change, that should act as a wake-up call.
2. Deal properly with the SSB Law fallout
The SRA should get an immediate opportunity to take responsibility when the Legal Services Board finally presents its report on how the closure of claims firm SSB Law was handled. This report has the potential to be even more problematic that the Axiom Ince one. The SRA could justifiably say it cannot be blamed for the actions of individuals, but with SSB the regulator was given plenty of warning of potential issues. SSB is also more toxic potentially because it affects clients who signed up to no win, no fee claims and have been sent invoices for costs. They have in turn complained to their MPs. The SRA rode out the storm after Axiom Ince, but if similar failings are identified with SSB, Rapson will have to account not just to solicitors but politicians as well.
3. Improve relations with the profession
The SRA’s refusal to apologise over Axiom Ince or even admit to any failings was more galling because solicitors were being forced to pay more to the compensation fund. As a public relations exercise it could hardly have been handled any worse. The SRA and its chief executive are never going to be popular with the profession, but at least they can be visible and explain their actions. The new chief must be able to deal with criticism and be willing to listen. This mood of antagonism has to end. Re-opening board meetings to the public would be a start.
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4. Scale back the AML blitz
Some things the SRA cannot change. The regulator has come under pressure from central government to act as a bulwark against money laundering activities and has had to bare its teeth. That has resulted in dozens of prosecutions culminating in ever-increasing fines against firms of all sizes. Yet the SRA has never been able to show that any firm has actually facilitated money laundering. An outcomes-based approach would be more proportionate and come as a blessed relief.
5. Act swiftly to deal with Post Office lawyers
The SRA’s position under Paul Philip has always been that disciplinary action against any lawyers connected with the Post Office scandal should wait until the final report of the public inquiry. That was understandable, even if it has upset those expecting more immediate action as details emerged of poor conduct during the inquiry. Accusing the SRA of inaction unfairly overlooks the considerable work that has been done to prepare for prosecutions, but once the inquiry report is out, the clamour for a rapid response will be considerable.
6. Decide on the future of the client account
It is unlikely that the SRA will have made up its mind on whether to scrap the client account before Rapson takes the reins. She will have to oversee a decision that will have huge ramifications for the regulated profession and radically change firms’ business models. But there remain questions over whether alternative ways of safeguarding client money are feasible or any more secure. Whichever option the SRA plumps for will be a key decision.
7. Improve public confidence and consumer protection
The client account forms part of a wider consumer protection review aimed at improving standards across the board. There are fundamental questions about the public’s perception of the legal profession, partly linked to the Post Office scandal and the Axiom Ince/SSB affairs. Rapson will be expected to lead on legal ethics, transparency, non-disclosure agreements, SLAPPs and the future of legal education and training. And that’s before we even discuss how AI is going to affect this sector and what role the SRA will have in regulating it.
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