Law Society chief executive Desmond Hudson has questioned the Solicitors Regulation Authority’s decision to disclose that 30 leading firms are in serious financial trouble.
At the SRA board last week, it emerged that 20% of the 160 firms in ‘intensive engagement’ talks about their finances rank among the top 200. Eight of the 160 were said to be at immediate risk of collapse.
The news came as the SRA prepared to write to 2,000 firms facing cuts in income about their finances. Hudson said it was no surprise to learn that this is a difficult time for the profession, but stressed that solicitors need less onerous and cheaper regulation, and more time to do their job.
He said: ‘We have repeatedly told the government, for example, that the cuts they have made have left legal aid work economically unviable for many practices, and that the issues run wider than that. It is less clear to me what interests are served by the SRA making these public announcements.
‘What the profession needs is a lessening in the regulatory burden and its cost, a period of stability from regulatory change and the chance to focus on serving clients.’
The SRA is under pressure to avoid expensive interventions into failing firms, which are likely to cost £7m more than budgeted this year. The board voted last week to use the compensation fund to pay for interventions, which is likely to mean each solicitor paying £23 extra as part of their fund contribution next year.
Hudson added: ‘[The Society] will continue to offer support to colleagues in the SRA in the search for lower cost, more agile alternatives to intervention. The changes that could be made are clear and needed now.’
The SRA will ask 2,000 firms affected by government reforms, such as the referral fee ban and legal aid cuts, for detailed information on their financial status. This will be fed into an online system, with the SRA supervision team offering help to any firm flagging up problems.