The Solicitors Regulation Authority stepped up its crackdown on suspected dishonesty and financial irregularity following the Axiom Ince debacle, new figures suggest.
Analysis of the reasons for intervening in law firms has revealed that potential breaches of accounting rules were cited in 11 cases in the year to October 2024. This was up from just four the year before and one in 2021/22. The number of interventions for suspected dishonesty increased from 14 to 16 during the past year.
The timing is important as this was the first full year after the SRA’s intervention into Axiom Ince when more than £60m had allegedly been found to be missing from the client account.
Relative jumps in dishonesty and accounts rule interventions – for context, the overall number of interventions dipped from 65 to 63 – suggest the SRA ramped up its closure powers in the immediate aftermath of the episode.
Andy Harris, partner at accountancy firm Hazlewoods, said there is now evidence of the regulator’s determination to take a tougher stance. ‘The collapse of Axiom has really spurred the SRA into action,’ he said. ‘They are going to look into problems with client accounts or allegations of dishonesty in much greater detail.’
The SRA shuts down firms to protect client funds and interests. Under an intervention the regulator can seize documents and money, suspend lawyers’ practising certificates and launch a full investigation. Most interventions are brought about by the firm being inactive for a length of time, entering insolvency or the owner’s death.
The intervention into Axiom Ince was the most costly in the SRA’s history and contributed significantly to the compensation fund making a loss of £29m in 2023. The regulator had to go into 14 branches which had been amassed through the acquisitions of Ince & Co and Plexus Legal.
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The timing of the intervention was the focus of much of last year’s critical report by the Legal Services Board into the SRA’s response.
It was revealed last year that the number of complaints to the SRA increased in 2022/23 by 29% to 1,044. This increase was partly down to a rise in client protection complaints about a delay following an intervention in locating a file.
