Today’s long-awaited report on the Solicitors Regulation Authority’s handling of Axiom Ince ahead of the firm’s closure is lacerating. The solicitors’ regulator did not act ‘adequately, effectively and efficiently’, concludes the LSB-commissioned review. Nor did it take all the steps it ‘could or should’ have taken in advance of shutting Axiom Ince down.

‘The SRA’s actions and omissions have in our view adversely impacted on confidence and trust in the regulation of legal services,’ says the board. That is about as damning as ‘quango speak’ gets. And those egregious failures will now be further spotlighted in national media.

In an unprecedented step, the umbrella regulator has initiated enforcement action under the Legal Services Act 2007 against its own lead enforcer. Reputationally, that is devastating. The SRA’s humiliation is complete. Talk about handing ammunition to your critics. ‘Judge not, that ye be not judged!’ many solicitor sceptics will cry from this day forward.

It is, of course, solicitors who are picking up the tab for the debacle. Compensation fund contributions are soaring to help plug a £60m hole in Axiom Ince’s client account.

So, what now?

Here are a few snap observations on the LSB’s announcement, as we digest the full report. First, it is time for the umbrella regulator to call a halt to the SRA’s inveterate empire-building. LSB approval is currently awaited for its land grab of legal executives via the transfer of oversight responsibilities to the SRA from CILEx Regulation. When urgent questions are being asked about the watchdog’s ability to regulate solicitors - never mind anyone else - it is surely untenable to extend its ambit further. 

As for the SRA’s barely concealed wish to evolve into the single regulator of all lawyers - well, that has to be the deadest of ducks for now.

Second, the SRA wants to further expand its reach (and sideline the Solicitors Disciplinary Tribunal) via the arrogation of effectively unlimited fining powers for all types of misconduct. That was a hugely controversial proposal even before today’s report. It is even more controversial now.

To what extent does the Axiom Ince report demonstrate that the SRA is fit to act as judge, jury and executioner in its own cause? Has it ever been fit so to act? The evidence is hardly compelling. 

Last week, the SRA issued a piece of its own research showing that only (only?) one in four ‘legal professionals’ views the regulator negatively. One has to admire the chutzpah of its timing. The Law Society responded to that exercise in solicitor-funded self-promotion by urging the regulator to get on with the day job. Prescient advice, it turns out.

We’re not done yet, either. As the SRA languishes on the ropes, there may be another body blow coming. A separate but related independent review is pending on the SRA’s regulatory actions in the lead-up to last year’s equally spectacular collapse of Sheffield firm SSB Group. Questions are being asked about SSB in parliament. Many more are incoming.

Will the House of Commons justice select committee take an interest? It probably should.

We were recently told that SRA chair Anna Bradley is staying on for an extra two years to help the Cube ride out the storm (or navigate what the SRA described, with characteristic understatement, as ‘not a steady state period’). As far as we know, long-time chief executive Paul Philip is going nowhere either.

Who knows whether and how quickly the duo will be able to rebuild trust in the SRA after the biggest reversal in its 17-year history. This is certainly no small task. The watchdog's defiant - even petulant - response to today's report is hardly an ideal start. 

 

This article is now closed for comment.

Topics