SRA plans to give itself the power to fine solicitors over £800,000


The Solicitors Regulation Authority (SRA) is planning to overhaul its financial penalty system. The new system would represent a substantial increase the level of fines available to punish high earning solicitors, while solicitors at the lower end of the wage spectrum would see their fines reduced. The SRA are now seeking consultation on an overhaul to the financial penalty system.

The new fine system would operate using a band classification. The incomes range from £21,000 (the current Law Society recommendation for trainee solicitor salaries based outside of London) to the top level of £500,000. The SRA's reasoning for this method is to "deliver proportionate and fair fines for individuals of differing means." Notably, for the highest earners and most serious infractions, the maximum proposed fine could be as high as £805,000, representing as much as 161% of their annual income. It also represents an increase in its fining powers at the higher end of almost £3250 % which is, to put it neutrally, quite a lot. Given the profession's previous opposition to the increase to £25,000 this is an ambitious proposal by the SRA (made without any particular justification or reasoning), particularly in circumstances in which it is the investigator, jury and judge, with the obvious concerns that brings.

The new system also means that, while fines for those at the top end of the bracket will increase substantially, fines for those on the lower end of the income spectrum will decrease from the current levels.

The SRA's current fining powers for solicitors working at traditional law firms is restricted to £25,000. The SRA hopes that with the new system in place they will be able to handle fines for solicitors from a lower income even for the more serious infractions of SRA rules and regulations. Solicitors on higher salaries however will be more likely continue being referred to the Solicitors Disciplinary Tribunal for these infractions.

In addition, a firm's turnover will now be taken into account when determining what level of fine the firm receives for a breach of SRA rules. The fines will range from 0.2% to 5% of annual domestic turnover depending on the seriousness of the offence. This will represent a doubling of the maximum penalty. Where previously a firm with £50 million annual turnover could receive a maximum fine of £1,250,000, that has now increased to £2,500,000.

Finally, following the SRA's consultation in May of this year, the SRA are preparing to update their Enforcement Strategy. The SRA's proposed new policy will state that when an individual has committed an act of sexual misconduct, harassment or discrimination, a financial penalty is highly unlikely to be used.

Due to the serious nature of these cases and the fact that the individuals perpetrating these acts may be a risk to others, these cases are too serious for merely financial penalties. Instead of a financial penalty, these cases will be referred to the SDT to determine if a suspension of strike off is a more appropriate course of action.

The consultation on the above proposals will be open from 22 August to 14 November 2022, and if approved may be implemented shortly thereafter. Read more about the consultation on the SRA's website here.

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