Regulators have begun a major review of reporting requirements for firms dealing with suspected misconduct by their employees.

The Solicitors Regulation Authority wants greater clarity to establish when and why firms should raise concerns about potential wrongdoing.

Currently there is said to be confusion among firms about when they should flag up issues. Some opt to report to the SRA the moment an issue arises, whereas others wait until the result of an internal investigation before alerting the regulator.

Speaking at a media briefing yesterday, SRA chief executive Paul Philip said the authority wanted to foster a ‘mature and grown-up relationship’ with firms and solicitors, finding the right balance of protecting the interests of the public and firms under its scope.

Philip added: ‘Timely reporting of potential misconduct is a key part of public protection. We want to make sure that solicitors and law firms are clear about what, and when, they should report.’

Currently the SRA receives around 12,000 enquiries a year, taking action in just a few hundred of these cases.

One issue likely to arise in the eight-week consultation is dealing with solicitors accused of inappropriate behaviour. The SRA will want to examine whether firms are doing enough to report alleged sexual misconduct and whether non-disclosure agreements are helping to suppress the release of information to the regulator.

It is understood the SRA is not planning to create a reporting regime as strict as (for example) the Financial Conduct Authority, which requires regulated parties to notify it immediately they become aware of a potential problem. Equally, the intention is not to effectively ‘outsource’ investigations to law firms themselves. The SRA stresses it has extra powers to probe cases and may have received complaints from other parties in relation to the same individual.

The regulator’s view at this stage is that mere suggestion or suspicion is too low a threshold and would result in over-reporting of matters that cannot be proved.

At a higher threshold, matters could be reported where an allegation of a serious breach is made and the evidence leads the person to ‘believe’ there could be a serious breach.

Solicitors and firms have until 27 September to respond to the consultation. The code of conduct will be updated accordingly – subject to approval by the Legal Services Board – next April.

Responding to the consulation, Law Society vice president Simon Davis said: 'The solicitor profession rightly maintains exceptionally high professional and ethical standards.

'The Law Society is glad of the opportunity to develop greater clarity on the process for reporting misconduct so that serious cases are reported promptly, prioritised and dealt with quickly.

'We hope for a common-sense approach that recognises the imperative to report matters when appropriate, deters over-reporting and is proportionate to the level of misconduct. The system should be suitable for the entire profession, from sole practitioners to larger firms.

'As with every profession, it is vital that any solicitor whose actions breach our code of conduct is held to account. It is in the best interests of the public, our members and their clients that the reporting process is clearly defined and easily understood.'