The Solicitors Regulation Authority appears to have secured support in the House of Lords for extending its fining powers for traditional firms.
In a letter to lord chancellor Alex Chalk, Baroness Stowell of Beeston, the chair of the lords select committee on communications and digital, said there is scope for legislating to widen the areas where the SRA could have unlimited powers.
Writing following evidence from the regulator on strategic litigation against public participation, Stowell cited the inconsistency in punishing breaches relating to economic crime and for firms engaging in unnecessary and abusive litigation. The Economic Crime and Corporate Transparency Act recently gave unlimited fining powers to the SRA where misconduct relates to financial crime, and Stowell said ongoing legislation around restricting SLAPPs should do the same.
‘At present, the regulator can fine traditional law firms up to £25,000 for wrongdoing related to SLAPPs,’ wrote Stowell. ‘This sum is very small given the overall turnover of these firms.
‘During the course of our work we have been told that this does not provide an effective deterrent.
‘The precedent for introducing higher fining powers is clear. The SRA already has powers to fine alternative business structures (other types of firms carrying out legal work) and those working in them £250m and £50m respectively. The logic of having a fining limit 10,000 times lower for traditional law firms eludes us.’
Stowell said the restrictions on unlimited fining powers were ‘problematic’, partly because they did not capture SLAPPs. The bill, she added, ‘offers a rare and valuable opportunity to enable the regulator to impose fines that actually deter wrongdoing and stop law firms from profiting from SLAPPs cases’.
The peer said the committee had heard repeated concerns that law firms may engage private intelligence firms or PR firms to ‘survey, intimidate or smear defendants’.
She suggested that the SRA’s powers of investigation should be extended to allow the regulator to look into the actions of third parties who might be engaged in this work.
‘This would help prevent law firms from simply outsourcing activities that breach the SRA’s professional standards,’ she added.
The Strategic Litigation Against Public Participation Bill, introduced by a private member but now with government backing, will shortly go to report stage in the House of Commons having passed the committee stage and second reading.
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