SRA interventions

SRA investigations

If a solicitor is undergoing an SRA investigation and fears that the SRA may intervene, the solicitor should tread very carefully indeed.

The SRA does not always tell solicitors that it is considering interventions during the early stage of an investigation and it is often too late to do anything effective when the solicitor realises that the SRA is proposing to intervene.

Is the SRA considering an intervention?

Early tell-tale signs that the SRA is considering an intervention are:

1. Requests for details of the number of active files
2. Requests for details of the number of files in storage
3. Requests for details of the number of wills
4. Demands for information to be supplied within 24 hours
5. Demands for information which are immediately backed up by section 44B notices

Those signs are often noticeable two months or more before the SRA gives a solicitor formal notice of a proposal to intervene by service of a case report proposing that an adjudication panel should intervene. If you recognise any of these signs we strongly recommend that you contact us as soon as possible, as our proven experience of dealing with SRA proposals can help.

Interventions without notice

In some cases, the SRA will intervene into a practice without giving the solicitor any notice at all. That is rare but it does happen if the adjudication panel is satisfied that it is in the public interest to intervene without notice to the solicitor.

When the SRA recommends an intervention

If the SRA serves a case report recommending an intervention, it is very important to obtain advice quickly. The SRA is unlikely to grant extensions of time for replying to the report and a strong reply can sometimes prevent an intervention. When we are asked to advise on replies we will consider a range of options available to deal with the matter in a manner which saves the solicitor from financial ruin. The options range from arguments based on the merits of the case to undertakings to change the firm’s practice, and extend (when necessary) to offers of voluntary closure.

If the SRA does intervene, there is a statutory time period of eight days to challenge the intervention in the Chancery Division. We are used to challenging interventions quickly and we have precedent notices and claim forms so that we can move quickly in appropriate cases.

Challenging an SRA intervention

There is a commonly held but wrong view in the profession that no one has ever successfully challenged an SRA intervention.

In the case of Sheikh v The Law Society [2006] EWCA 1577 we overturned an intervention in the Chancery Division, although that was subsequently reversed in part in the Court of Appeal. Since then we have successfully challenged a number of interventions. Successful challenges do not reach the press because the SRA consents to orders withdrawing the intervention notices and judgments are not therefore handed down.

In December 2014 when approving a consent order withdrawing an intervention notice Mr Justice Blackburne made the following comment about our client’s case:

‘It did strike me as a million pities that [a solicitor], who had conducted a practice, as far as I know, without blemish for so many years, should find himself in such difficulties…’

Regardless of whether a solicitor challenges an intervention, the intervened solicitor will almost invariably have his or her practising certificate suspended. An application can be made to the SRA straight away for the suspension to be terminated, and a solicitor should also consider whether it is appropriate to simultaneously apply for authorisation for a new practice.

Costs of an intervention

The intervened solicitor is also at risk of a claim for the cost of the intervention. We often find that insolvency practitioners and other professionals advise members of LLPs that they can avoid claims for the costs of an intervention by placing the practice into administration. That is not good advice as managers and employees of the practice can be liable for the costs in prescribed circumstances even if the LLP goes into administration.

The cost of an intervention can be crippling as it is not unusual for the SRA to incur costs of more than £100,000 on an intervention. In a complex case, the costs can be substantially higher. A solicitor faced with a claim for costs should consider the relevant sections of schedule 1 of the Solicitors Act 1974 and Schedule 14 of the Legal Services Act 2007 very carefully as there are often technical arguments available to challenge the claim for costs.