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For any solicitor working in England and Wales, being investigated by the Solicitors Regulatory Authority (SRA) can be an extremely daunting prospect. SRA investigations can take a long time. If the charges are proven they can result in significant sanction, including being fined and/or struck off. SRA investigations can also lead to parallel investigations by other regulators and, in extreme cases, even criminal prosecution.
In common with other professional regulatory bodies, the SRA has recently expanded its remit to police behaviours that were previously considered ‘private’. These matters are usually extremely sensitive and can involve criminal law crossover.
At the same time the process of engaging with the SRA has become much more complex. Whereas an under-investigation solicitor may previously have considered seeking specialist representation only if their case went all the way to the Solicitors Disciplinary Tribunal, it is now increasingly common to instruct a regulatory law expert much earlier in the investigation process.
Hickman & Rose specialise in defending solicitors under SRA investigations. Our expert regulatory lawyers have achieved significant successes for solicitor clients not only at the SDT, but also in persuading the SRA to take no further action, and in negotiating pre-action settlements which enable solicitors to move on with their careers with their reputations intact.
Dealing with the SRA investigation process is a daunting undertaking, but the sanctions, if found culpable, can be severe. Anyone facing the sort of highly sensitive and potentially damaging issues these investigations involve should seek specialist advice.
As the regulatory body for solicitors practising in England and Wales, the SRA has wide powers of investigation into allegations of misconduct both by law firms and individual solicitors. While the SRA can determine some matters itself (and has power to issue sanctions in relation to them) it refers the most serious matters to the Solicitors Disciplinary Tribunal (SDT), where it acts as prosecutor.
Most SRA investigations start when the authority receives a complaint. This may be from a client, a third party, an opponent or due to a self-report. However, SRA investigations can also come about through reports from the Legal Ombudsman, from another regulator such as the FCA or the ICO, from the police, and even following media coverage.
Having decided to investigate, the SRA will appoint an Investigator who has the power to require attendance at interviews, provision of information and documents, and permission to carry out on-site inspections.
The subject of any SRA investigation is entitled to be represented throughout the investigation process, including during any interview (which is always recorded). Anyone who is approached to be interviewed or provide documentation is strongly advised to seek legal advice before engaging with the Investigator.
After completing his or her enquiries, the Investigator will prepare a report, in which any alleged breaches of the SRA’s codes, standards, principles or regulations are set out. If issues of professional misconduct are raised in the report, the SRA will alert the solicitor or firm by giving notice to them. The solicitor or firm has the opportunity to respond in writing to this notice.
The SRA then makes its disciplinary decision. If it decides the matter is serious enough to merit referral to the SDT, it will prepare an application to the Tribunal detailing the allegations and the factual basis upon which they are made. The SDT reviews this, and if it agrees that there is a case to answer, it will serve the statement and supporting evidence on the solicitor or firm concerned and SDT proceedings will follow.
If the SRA determines that the matter falls below the threshold for referral to the SDT, then its sanction is normally a rebuke, fine or Regulatory Settlement Agreement (RSA), more details on which are below.
The Solicitors Disciplinary Tribunal (SDT) is an independent body which adjudicates alleged breaches of the SRA rules and regulations which are applicable to solicitors and their firms. The SRA acts as prosecutor in SDT proceedings.
Proceedings before the SDT are governed by the tribunal’s own rules and procedures. Hearings are adjudicated by a Panel of three members, usually two professional solicitor members and one Lay member. The burden of proof lies on the SRA, which must convince the Panel to the civil ‘balance of probabilities’ standard.
If the SRA’s case is proven, the sanctions available to the SDT panel include the ability to strike the respondent solicitor off the Roll, to suspend them from practice, pay an unlimited fine, and pay the costs of the SRA’s prosecution.
In some cases, simply being investigated by the SRA holds the potential to be reputationally and financially ruinous. Some solicitors are therefore keen to come to an agreement with the regulator at an early stage.
Regulatory Settlement Agreements (RSAs) are one means to achieve this. An RSA is an agreement to end disciplinary proceedings sometimes without the need for a hearing before the tribunal in which the terms can be negotiated. They can be a quicker and more cost-effective way of dealing with disciplinary allegations.
Even if a matter has been referred to the SDT, it may still be possible to conclude the case without a full SDT hearing by way of an agreed outcome whereby the solicitor has a say in how the matters are publicly presented.
Any individual solicitor under investigation will usually be informed of this by the SRA. However, in cases where the SRA suspects that informing the subject may prejudice its investigation, it can start without first notifying them.
The SRA can inform an individual’s employer and firm management of its actions as well other regulators if applicable. It also has powers to contact third parties in order to obtain evidence.
Precisely how a solicitor should respond to a notification of SRA investigation will always be case dependent, but it is generally advisable to adopt a proactive attitude to the regulator.
An early explanation of why an investigation is unmerited – coupled with timely presentation of evidence backing this up – can enable the regulator to understand that the matter may be different to how it was perceived.
The SRA itself has powers to impose sanctions against a firm or an individual without the need to refer them to the tribunal. They include a fine, a rebuke and a reprimand.
The SRA does not generally publicise the fact that it is undertaking an investigation. However, any decision it makes, such as a decision to enter into a Regulatory Settlement Agreement or to refer a case to the SDT, will usually be published on its website.
In most cases the SRA will write to the respondent to inform them of the proposed text of such a website announcement, at which point the respondent can make representations.
Settling an SRA investigation by means of Agreed Outcome or Regulatory Settlement Agreement will normally not prevent the fact of the investigation becoming public, but does prevent the matter going to a public hearing.
Sanctions available to the SDT panel include the ability to strike the respondent solicitor off the professional Roll, to suspend them from practice, pay an unlimited fine, and pay the costs of the SRA prosecution.
As a matter of principle, the SDT does not normally award costs to any vindicated respondent in an SDT hearing unless there is a “good reason” to depart from the usual position.
The general principle is that SDT hearings are public meaning members of the public and the media may attend with the latter able to report proceedings including evidence adduced and the panel’s decisions.
There are certain limited circumstances when it can be successfully argued that the proceedings should be held in private.
A Rule 2.3 Notice letter is a formal letter from the SRA setting out its allegations and giving the solicitor of firm the right of reply. In general it is prudent to take specialist advice before replying to a Rule 2.3 notice letter as the best way to respond will always be case dependent.
Certainly a Rule 2.3 Notice letter should never be ignored.
Hickman & Rose has acted in many of the SRA’s biggest investigations. In recent years our lawyers have achieved significant successes for clients including:
• A law firm notified by the SRA that it was going to issue proceedings for alleged AML breaches. Following representations by us, the SRA closed its investigation taking no enforcement action.
• A partner at a major law firm investigated for facilitating money laundering and failing to comply with the Money Laundering Regulations. After detailed written submissions by us, the SRA took no action.
• A partner and head of department of a well known law firm accused of misappropriating a substantial sum from a client account. This matter was settled without the case being referred to the Tribunal.
• A partner in an international law firm investigated for evasion of tax in his personal affairs. This matter was settled without the case being referred to the Tribunal.
• A solicitor and head of department investigated by the SRA for numerous breaches of confidentiality by transmitting highly sensitive information about clients at her former firm without consent. Following representations by us, no action was taken.
• A solicitor at a US law firm investigated for dishonesty by misuse of an Oyster 60+ card for a prolonged period. We submitted medical information and written arguments and the SRA did not proceed further.
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