Gus John report calls for ‘more nuanced approach’ to enforcement after finding disproportionately heavy penalties.
Black and minority ethnic (BME) solicitors are disproportionately represented among those investigated by the Solicitors Regulation Authority and receive harsher sanctions when convicted – but the regulator is not institutionally racist, an independent study published today has found.
The 237-page report by Professor Gus John finds evidence of disproportionality at three stages of the regulatory process.
BME solicitors are more likely than whites to be subject to investigation, comprise a higher proportion of those against whom action is taken and are subjected to more severe sanctions.
For breaches of accounting rules, BME solicitors are far more likely to be fined rather than reprimanded.
Despite these findings, the report says: ‘It is important that these results are not immediately interpreted as evidence of discrimination or racism on an institutional level.’
Anecdotal evidence, says John (pictured), suggests BME practitioners in City and magic circle firms do not face the same challenges as those in inner-city high streets and are not subject to regulatory disproprotionality.
Instead, the report concludes, the disparity highlights wider challenges faced by small firms or sole practitioners: BME solicitors are over-represented in both categories.
Such practices lack financial cushions against temporary cashflow problems and are less able to manage risk and ensure best practice is adhered to, the report says.
‘If BME solicitors are disproportionately represented in the composition of these more vulnerable firms, then BME solicitors will be disproportionately investigated for financial irregularity,’ says the report.
‘As these firms lack resources in the first place, they will be less able to structure solid and robust defences and may, therefore, be more susceptible to more severe sanctions, resulting in evidence of procedural disproportionality.’
Among 50 recommendations, the report calls for discussion between the Law Society, the SRA and BME stakeholders.
It calls for an understanding of the nuances of socio-economic and wider societal and political factors that may increase the likelihood of junior BME solicitors establishing sole practices, and the vulnerability of these firms to financial matters.
In keeping with outcomes-focused regulation objectives, it suggests the SRA and all those involved in regulatory procedures should adopt a ‘more nuanced approach’ to enforcement and acknowledge that race-related issues can co-relate as much to class and socio-economic background as to ethnicity.
Supervision and engagement with sole practitioners and small firms should be conducted against this background, so that early warning signals could be agreed between supervisors and practitioners, and preventative action taken.
The disproportionate regulatory outcomes for BME solicitors, the report suggests, have a direct impact on access to justice for the communities served by the firms and upon the regulator’s objective to ‘encourage an independent, strong, diverse and effective legal profession’.
In an interview with the Gazette, John described the findings as ‘very troubling’.
The problem, he said, is not fundamentally one of solicitors’ ethnicity but to do with the manner in which they operate and the extent to which they manage risk.
However, he said there remains a level of racism in the profession that limits the jobs open to BME lawyers.
While the SRA’s ‘mantra’ is ‘public interest’, he accused the regulator of undermining other key objectives in the way it regulates.
Public interest regulation, he said, requires a more joined-up approach. ‘It will no doubt take the SRA time to put in place an action plan, but one thing that needs addressing immediately is what the report means for the way it regulates sole practitioner and BME firms,’ he said.
The John review was commissioned by the SRA in 2012 following reviews by Lord Ouseley in 2008 and Pearn Kandola in 2010, which both found disproportionate behaviour by the regulator in relation to BME firms.
It looked at 160 cases concluded between 2009 and 2011; 80 involving white solicitors and 80 involving BME solicitors.
While BME solicitors make up 13% of the solicitor population, they represent 25% of new investigations.
BME solicitors account for 29% of interventions; 33% of cases referred to the SDT and 32% of cases where conditions were attached to practice.
BME respondents were given more severe sanctions than their white colleagues, with white solicitors more often given warnings or rebukes, than the BME sample.
The largest difference in the sanctions passed between the two ethnic groups was in the ‘Conditions on PC’, which accounted for 20% in the BME group compared to 7.5% in the white group.
An analysis of 72 judgments passed by the SDT, 40 cases involving white respondents and 32 involving BME, found that 28% of BME cases ended in the suspension of the respondent compared with 17.5% in cases where the respondent was white.
Where the SDT dealt with ‘Fraud, Dishonesty and Money Laundering’ (FML) breaches, 50% of whites were fined compared to 19% of BME cases, and 23.8% of BME cases ended with a suspension of the PC, while none of the white cases did.
The report found a ‘clear disparity’ in the sanction imposed in cases involving ‘Solicitors’ Account Rules’. Those involving a white respondent were more likely to end with a relatively minor sanction such as a reprimand (48%), against 21% in the BME group.
Reprimands formed the majority of the sanctions given in the white group. By comparison, the most frequent sanction in the BME group was a fine, with 26%.
Suspensions accounted for 21% of BME sanctions, nearly five times more frequent than suspensions occurring in the white group, which accounted for only 4% of cases.
The Law Society chief executive Desmond Hudson said the Society shares the report’s concern about the challenges faced by BME solicitors and will consider its findings in detail.
Lucy Scott-Moncrieff, chair of the Society’s equality and diversity committee said the Society will work with the SRA to examine ways to provide additional practice support for BME and other members.
The Solicitors Disciplinary Tribunal said that it had not been invited to provide evidence to the report but that it was aware of no appeal against a decision being successful on the ground of disproportionality of sanction on a BME practitioner.
A statement said: 'The SDT will not be complacent and will take careful note of all professor John’s findings.’