Monthly Archives: May 2015

Have an exit strategy, advises the SRA

Law firms should ensure they have an exit strategy to close down their businesses in line with proper procedures, the Solicitors Regulation Authority (SRA) has advised after a series of related Solicitors Disciplinary Tribunal (SDT) hearings.

The Tribunal fined five solicitors in April in cases brought by the SRA where the firms failed to follow the correct process for closure.

Gordon Ramsay, SRA Director for Legal and Enforcement, said: “Firms have professional responsibilities, and those responsibilities remain when a firm is closing down. The need to think about the impact on clients becomes more important when the firm faces closure, voluntary or otherwise.

“This is not an issue about affording run-off cover or finding a successor practice, which we know can often be a problem for those looking to close down. It is about ensuring the interests of clients and others are fully protected.”

The SRA provides detailed guidance on winding down on its website including an at-a-glance a checklist to help firms get it right and ensure their clients are not put at risk. The SRA’s guidance on closing down is available here:

Go to the guidance page

Fines issued by the SDT for failure to close properly were:

  •  14 April: David Alan Eager, fined £1,000 and ordered to pay £13,000 costs
  •  15 April: John Bryon Sampson and Angela Susan Marshall, fined £2,500 and £1,000 respectively and ordered to pay £11,000 costs
  •  21 April: Justin Philip Huntly Nelson, fined £2,500 and ordered to pay £5,200 costs
  •  23 April: Ian Robert Gannicot, fined £5,000 and ordered to pay £12,770 costs

The SDT aims to publish its decisions on these matters on its website, within seven weeks of each hearing. Appeals can be lodged within 21 days of these decisions being published.

The tribunal keeps a rolling log of decisions made on its sanctions sheet here: This is an Excel spreadsheet.

SRA widens definition of ‘small firms’ by doubling turnover limit

The Solicitors Regulation Authority (SRA) has widened its definition of a ‘small firm’ by doubling the annual turnover limit from £200,000 to £400,000.

The limit of four on the number of ‘managers’ (partners, members or directors) is not changing.

The move increases the number of practices which can access the regulator’s ‘small firms’ services from 3,600 to 5,200 – more than half the total number of law firms.

The SRA said its original definition of ‘small firm’ was criticised as too restrictive by respondents to a discussion paper launched at the SRA’s annual COLP and COFA conference in November.

The Law Society said it was “concerned about the use of such a precise definition” which created “problems at the upper margin”. Instead of the turnover limit, the society suggested restricting the number of fee-earners to 25.

In its response the SRA said: “We have reviewed our data to inform our definition. We have decided that a small firm will be defined as a sole practitioner or a firm with no more than four partners, members or directors, which has an annual turnover of no more than £400,000.

“We will not include any limit on the number of PC holders, as in practice turnover operates as the appropriate restriction.”

According to SRA figures, 900 law firms with four or less managers have a turnover of more than £400,000 and a further 1,450 firms a turnover of over £600,000.

In a separate development, the regulator has launched a small firms team. It is made up of around a dozen staff, who all have experience of working with or at small law firms.

The SRA said that early contact with the team by firms that “may be experiencing regulatory problems or other issues” would “improve outcomes for all and will help prevent matters from escalating”.

Chief executive Paul Philip commented: “The team understands the needs of small firms and will be able to offer advice that is appropriate for a firm’s size and circumstance.

“It will offer a first point of contact for small firms, making business easier for small firms, while protecting the public.”

The SRA has a small firms web page, a dedicated helpline which is currently handling 15% of all calls to the professional ethics department and is developing webinars based on responses to the discussion paper.

(Legal Futures, 13th May 2015)

Arrangements for reporting firm diversity data to the SRA in 2015

The SRA has confirmed that following feedback after last year’s diversity data collection exercise, this year firms will not have to update their organisation diversity data on mySRA but use an easier reporting method instead.

The SRA said it will contact all firms to advise when and how the firm diversity data will need to be reported as soon as possible. Firms will then have three months to report their data.

There is no change to the requirement for firms to collect and publish their firm diversity data annually. Firms may decide when to collect the diversity data from their staff each year.