News focus: SIF, sanctions and SLAPPs - a busy week for the SRA

Half-term can be slow for legal news, but not so at The Cube this week as the Solicitors Regulation Authority issued numerous announcements with important ramifications for solicitors.

First, the SRA confirmed that fixed penalties for lower-level misconduct, fines based on a firm’s turnover and a pilot of personal impact statements in cases involving harassment will be introduced later this year following consultation on the regulator’s fining powers. It said the changes should help resolve cases more quickly, while new fining bands will enable different levels of fine to be issued to a low-earning junior solicitor compared with a senior equity partner. Fines will be up to 5% of a firm’s annual domestic turnover.

The regulator also pledged to publish more information, written in plainer English, about disciplinary decisions. It will also introduce set periods – based on decision type – for which individual decisions will remain on the public record. These will range from three years for warnings or fines to strike-off decisions remaining public permanently.

Personal impact statements will be made available to help the Solicitors Disciplinary Tribunal decide sanctions for offences involving sexual harassment, discrimination and harassment. A pilot is expected to run for three years.

Separately, the SRA announced agreement on the final rules for maintaining the Solicitors Indemnity Fund (SIF), which protects retired practitioners from claims once their six-year run-off cover

has elapsed. The SRA’s takeover of the scheme will require neither extra staff nor an immediate levy on the profession, it said.

The takeover of SIF in October should draw a line under a decade of uncertainty about the scheme, which was set up as an interim measure in 2000. The SRA originally announced closure plans in 2013 but, after a wave of protests initially led by sole practitioners, conceded that the fund was both necessary and sustainable. From October, subject to Legal Services Board approval, post-six-year run-off protection will be part of the SRA’s regulatory arrangements, with ‘appropriate oversight and governance’.

The Law Society welcomed two changes to the original SIF proposals, including ensuring that when an arbitrator is required it is appointed by ‘an appropriate independent body’. It has also been agreed that if at some point the SIF is wound up, and the SRA has no further indemnification purpose for the residual funds, any remaining money would return to the Society, ‘to be used for the benefit of the profession’.

Briefing journalists, SRA board members said they were confident the new arrangements would cut the SIF’s running costs. The SRA will need ‘probably no’ extra in-house staff to run the scheme, chief executive Paul Philip said. An external partner will be procured by October to carry out specialist claims-handling tasks. This is an apparent concession to the concerns of the ‘Big Five’ local law societies, which last year questioned whether the SRA had the expertise to run SIF.

One reason for bringing the scheme in-house from its current operator, Solicitors Indemnity Fund Limited, is to improve the quality of management data, SRA chair Anna Bradley said. ‘It will allow us to collect and analyse the data we need.’ For ‘a variety of reasons’, data on historical claims was not available from SIF Ltd, she added.

Meanwhile, the regulator issued another bulletin on strategic lawsuits against public participation, telling solicitors they must not serve as ‘hired guns’ in abusive reputation management actions.

Publishing a thematic review of conduct in disputes, the regulator revealed that spot checks had exposed widespread ignorance among solicitors who advise in defamation and privacy cases of the obligation to report abuses. Law firms must do more to counter SLAPPs, the regulator said, and its review contains checklists firms can use to ensure they are litigating properly.

The SRA issued a warning to solicitors on SLAPPs last November, as public scrutiny of allegedly abusive litigation intensified in the wake of Russia’s invasion of Ukraine. Philip told a Lords committee last month that the regulator is currently investigating 40 suspected SLAPP cases.

As part of its thematic review, but before last November’s warning, the regulator visited 25 firms in total on both the claimant and defendant side which advise on defamation and privacy. Eleven heads of department with overall responsibility for reputation management were unaware of SRA guidance on reporting and notification obligations relating to potential misconduct in disputes.

In three cases – which the SRA is investigating further – a firm had identified potentially abusive litigation by another firm but had not reported it to the SRA.