A consultation opens today on a proposal that would allow the Solicitors Regulation Authority to fine ‘traditional’ firms as much as £100,000.
The solicitors’ regulator can currently impose fines only up to £2,000, with anything more serious being sent to the Solicitors Disciplinary Tribunal.
By increasing the number of cases it deals with, the SRA suggests disciplinary matters would be resolved an average of 10 months more quickly, saving around £8,000 per case in legal costs.
The authority also wants to end the risk of ‘perceived absurdity and unfairness’ in the lack of consistency with how alternative business structures are treated. Currently the SRA can fine the manager or an employee of an ABS up to £50m, and fine the business itself up to £250m.
‘We are considerably limited in the scope of matters which can be dealt with without a prosecution before the SDT,’ said the consultation paper.
‘The current regime fails to take advantage of the fact that a considerably quicker, cheaper and more proportionate regime for levying fines against law firms is already in place for ABSs.
‘Applying the ABS fining regime more widely could save considerable time, stress and cost for regulated persons as well as result in efficiency and cost savings for the SRA and therefore for the profession which ultimately funds us.’
The Legal Services Board, the oversight regulator, supports the proposal for an increase in fining powers, while the SRA said the Law Society has indicated it would not object to some degree of increase. The Ministry of Justice has previously said bringing fining powers for traditional firms to the same level for ABSs would require primary legislation, but it would be happy to sanction a more modest increase immediately.
The SRA said that while it remains ‘firmly of the view’ that commensurate fining powers is the best option, it will seek the profession’s views on more conservative changes that can be achieved more quickly.
The proposal offers limits of £10,000, £50,000 and £100,000, as well as enabling the SRA to agree (rather than impose) fines of a more significant amount.
It is hoped an increased limit would mean fewer cases going to the SDT. Over the past three years, 58% of the fines imposed were between £2,000 and £10,000 - with costs averaging £8,656 for each case.
The consultation added: ‘When an alternative system exists for more efficient resolution of disciplinary matters, stakeholders will inevitably question why hundreds of thousands of pounds should be spent each year on pursuing firms through a separate, more costly regime.’
The consultation closes on 7 February.