Susanna Heley and Nigel West consider the SRA’s recent guidance on its approach to fines and decision-making in disciplinary cases, and outline some of the practical issues this raises
Few in the profession will not be aware that the Solicitors Regulation Authority (SRA) achieved its long-stated goal to increase its internal fining powers last year. Since its powers were formally increased to allow it to issue fines of up to £25,000 on 20 July 2022, the SRA has only used them on a handful of occasions – largely due to timing issues rather than by design.
What it has done in the interim, is to issue updated guidance on its approach to imposing fines and its process for making first-instance decisions (FIDs). The SRA’s detailed guidance on its approach to determining fines was updated on 30 May 2023.
Also on 30 May 2023, the SRA published guidance called Decision-making in disciplinary cases (the DM guidance). This guidance sets out the SRA’s approach to FIDs, including its ability to vary its own processes and admit any evidence considered fair and relevant to the issues regardless of its admissibility in court.
The SRA’s FID process
The DM guidance takes the reader through the SRA’s process, setting out that respondents will usually have a period of 14 days to respond to the SRA’s notice and gather / provide supporting evidence. It explains that most decisions will be made on paper by a single legally qualified adjudicator. Respondents are also assured that “the staff to whom decisions are delegated are sufficiently trained, experienced and competent to make these decisions”. Although, from personal experience, if you ask for records of what training has been given, your request may be rejected on grounds that “any training materials used at the SRA are confidential to the SRA and for internal use only, and so it will not be possible to disclose these”.
The SRA reserves the power to vary its process and dispenses with the usual rules of evidence, confirming that “the adjudicator may admit any evidence they consider fair and relevant to the case before them, whether or not such evidence would be admissible in a court”. The adjudicator will only consider documents provided to the respondent.
The DM guidance discusses three principal variations to the default process of decision on paper by a single adjudicator. These are:
- Decision on paper by a panel of adjudicators. Panels will usually consist of three members, including at least one legally qualified and one lay member as is considered appropriate. If a panel is only two members, the chair has a casting vote. Any fine expected to fall within band D (relating to conduct assessed to be more serious and of high impact) will automatically be referred to a panel. Otherwise, the SRA or the respondent can request a decision by panel. The chief adjudicator will decide whether a request should be granted. A single adjudicator can also refer a matter to a panel.
- Inviting the respondent to an interview. This is an inquisitorial process and only the adjudicator (or panel, as the case may be), respondent and a person in support or representative should be present at an interview. This is not a cross-examination – there is no option to put in a witness statement and no opportunity to make submissions. It is not expected that the SRA will use this power frequently.
- Directing an oral hearing in public or in private. Hearings should only take place before a panel and, it is envisaged that they will not be frequent. Rule 8.6 of the SRA Regulatory and Disciplinary Procedure Rules states that hearings may be directed at the sole discretion of an adjudicator where the matter cannot be considered by the Solicitors Disciplinary Tribunal (SDT) and:
- there is a material dispute of fact which cannot be determined without a hearing in which the parties are cross examined; or
- if there is an overriding public interest in the matters being heard in public.
It is evident that the SRA’s process for making FIDs is extremely flexible. Normal rules of evidence and procedure do not apply and the SRA is at liberty to adopt a paper-based, inquisitorial or adversarial process where it considers appropriate.
The SRA’s internal process is not, and has never pretended to be, compliant with article 6 of the European Convention of Human Rights (ECHR) – the right to a fair trial in public before an independent and impartial tribunal within a reasonable time. In common with many regulators, the SRA relies on the existence of routes of appeal to the SDT or High Court, as the case may be, to ensure that the process as a whole is compliant with article 6.
My personal view is that the High Court decision in the Solicitors Regulation Authority v Solicitors Disciplinary Tribunal  EWHC 2862 (Admin), (more commonly known as the Arslan case) requiring the SDT to undertake appeals by way of review rather than rehearing does cause an issue with article 6. This is because the “independent and impartial” SDT is constrained as to what it may consider when acting as an appellate court, which seems contrary to a long line of ECHR jurisprudence.
More SRA FIDs?
There is a general expectation that the number of cases in which the SRA is the primary decision-maker will increase. This is not just because of the increase in its general fining powers to £25,000 but also because of the steady development of the alternative business structure (ABS) market, whereby the SRA already has primary jurisdiction for fines and directions such as terminating authorisation as an entity or authorised manager or role holder under the Legal Services Act.
Anticipated changes such as the extended powers under the Economic Crime and Corporate Transparency Bill, including in respect of SLAPPs, are an indication of the general direction of travel. Furthermore, if the Chartered Institute of Legal Executives decides to adopt the SRA as its regulatory arm, the SRA will act as primary decision-maker for legal executives, as the SDT has no direct jurisdiction over them (unless they work in SRA regulated firms) and could only gain such jurisdiction by the amendment of primary legislation.
What does this mean in practice?
Solicitors in traditional, non-ABS practices are more likely to be sanctioned internally by the SRA than has been the case in the past. Those who are accused of dishonesty or sexual misconduct or have serious criminal convictions are still likely to face a trip to the SDT. Any case in which strike-off or suspension is likely will not be affected by the change in the SRA’s powers.
Where a fine is the likely outcome though, solicitors will need to be prepared for the process much earlier. Evidence, including witness statements, may well be needed at the time of the initial response to the notice recommending a sanction. Failure to include witness evidence at that stage could lead to the loss of any prospect of giving evidence in person.
As the SRA process tends only to give respondents 14 days to respond to notices, this could lead to unfairness as it may not be possible to gather formal evidence within that time. Those who need more time should make cogent requests early on explaining why they need it. The SRA should not refuse to allow time for witness statements to be obtained – although they may ask why such evidence was not gathered even before the notice recommending a sanction. This can put respondents in a difficult position as it’s common for SRA investigations to range over a number of issues and make requests which are not then progressed. The notice recommending a sanction is the first formal full iteration of the SRA’s case where there has not been a forensic investigation – as is likely to be more common in cases dealt with internally.
Those facing potential SRA FIDs need to be aware of their right to request an oral hearing and exercise it where appropriate – such as where they feel that there is a need for witness evidence – or even cross-examination of SRA witnesses. To be clear, respondents are at liberty to request an oral hearing in any case. They cannot insist upon it. But a refusal to grant an oral hearing when requested could amount to a serious procedural irregularity and give rise to a successful appeal in some cases. The SRA lost an appeal on this precise point in an authorisation case Yussouf v SRA  EWHC 211 (Admin). The court in that instance held that an oral hearing was required due to the serious nature of the allegations and the need to test them by oral evidence. The ratio of the judgment is largely reflected in the circumstances of rule 8.6 (quoted above), which trigger the possibility of an oral hearing.
Respondents should be aware though that, where the SDT has jurisdiction and an oral hearing is requested, it is more likely that a case will be referred to the SDT than that the SRA will hold the hearing. Hearings are significantly more likely for those cases where the SDT does not have any primary jurisdiction, such as cases involving entities which are ABSs and non-lawyer owners and managers of such entities.
It is not yet clear how the SRA will approach oral hearings logistically, where they may be held and how they will be structured. It is possible that the SRA may rent a hearing room as some regulators do, or default to virtual hearings. As the SRA has no fixed base for its hearings, it may be possible to rent rooms that are local to respondents. It will be interesting to see how these practical issues play out.