Time’s up

In response to the recent increase in regulatory fining powers at the Solicitors Regulation Authority (SRA), the regulator and the Solicitors Disciplinary Tribunal (SDT) recently published a joint statement on referrals to the tribunal.

The document aims to set out a framework for the types of disciplinary cases that will be dealt with under the £25,000 threshold, and those which will likely end up at the tribunal. Clearly, the expectation is that the SRA will deal with more cases without referral to the SDT, a change that leading silk Geoffrey Williams KC sees as the regulator acting like “prosecutor, judge and jury”. 

Who will hear what cases?

Cases that will no longer be referred to the SDT will include some relatively serious breaches of conduct rules with a high degree of personal culpability, where a fine is an appropriate sanction.

However, the most serious cases of unethical behaviour (such as dishonesty), instances of repeated low-level breaches, and those cases where oral evidence is necessary will continue to be referred to the tribunal.

That leaves the SRA with a huge amount of discretion to decide whether it is appropriate to handle a misconduct case ‘in-house’. 

What will be referred?

One of the categories of cases highlighted in the joint statement that “should typically be referred to the SDT” is:

“A failure by a law firm to take appropriate steps to protect an employee from counter-inclusive misconduct, or to ensure a safe working environment (for example, where there is evidence of a pervasive toxic culture).”

This fits neatly into the SRA’s recent move into regulating workplace cultures, signalled in a 2022 Thematic review on workplace culture and guidance notes on Workplace environment and Sexual misconduct.

It is clear from these publications that the regulator expects firms to take steps to support employees’ wellbeing, while minimising harmful working practices and behaviours.

Although not an express rule, the SRA says that their expectation is encompassed in the general requirement to have “effective governance structures, arrangements, systems and controls in place” to manage risk and regulatory compliance (Code of Conduct for Firms, para 2).

Following this logic, we are likely to see the SRA take disciplinary action against firms and their leaders where toxic cultures are so serious that they result in unethical individual behaviour, or they risk doing so.

Rather than a slap on the wrist and a fine, in this joint statement the SRA has committed to elevating these cases to full tribunal hearing.

What is a toxic workplace?

As yet there is no clear definition, but there are plenty of clues to indicate what the SRA considers to be the features of a toxic workplace:

• unlawful discrimination
• bullying and harassing behaviour
• failing to treat colleagues fairly and with respect
• high pressure ‘boiler room’ cultures
• unreasonably high targets and heavy workloads
• expectations of excessively long hours
• high staff turnover and poor mental health

Many of us will have experienced nasty workplaces at some point in our careers and the fact that the SRA is trying to change the profession for the better is welcome. There is a rule change in the pipeline that will place a conduct duty on law firm leaders to challenge and report certain toxic behaviours.

Using the threat of SDT referrals to those who make their employees’ lives a misery should be an effective regulatory tool – as long as the SRA follows through.