SRA investigations: what happens after the initial investigation?

In Part 1 of this series, we looked at the first steps of the SRA processes during its investigation. In this Keynote, Professional Discipline solicitor Hannah Pilkington focuses on the SRA decision-making process, internal sanctions which can be imposed, and opportunities to influence the outcome and mitigate risk to you or your firm.

What happens after the investigation has been concluded?

You will have been advised of the investigation, seen a Notice with allegations, and made a response. The SRA will now need to decide the next steps.

An Authorised Decision Maker (ADM) will usually consider the Notice, SRA evidence bundle, and any defence representations. They will consider the recommendation by the Investigation Officer which may be to refer to the Solicitors Disciplinary Tribunal (SDT), to impose an internal sanction, or to impose a specific financial penalty.

An ADM should be an independent person at the SRA who has not been involved in the investigation of the matter.

There is no hearing at this stage, and the case is considered on the papers.

The ADM can decide to:

• pause a decision and send the matter back for more investigation
• impose an internal sanction
• refer the case to the SDT.

Can I challenge the decision?

You will be sent a copy of the written decision and information about the next steps. It is important to obtain advice on this decision and whether it was reasonable.

There is a right to an internal review on grounds either that:

1. a) the decision was materially flawed; and/or
2. b) there is new information which would have had a material influence on the decision.

This might, for example, be because the ADM did not in fact have all of the relevant documents in front of them, or, for example, where the solicitor is now ill and unable to engage in the proceedings and will no longer practise.

An application for a review must be made within 28 days of written notice of the decision, or the reasons for the decision, and it is important to obtain advice promptly.

On occasion, the SRA might review its decision of its own choice, for example where a procedural irregularity has become clear. Unless there are exceptional circumstances, the SRA has up to one year to seek a review. You would have a chance to comment on the SRA’s application for review.

What sanction can the SRA impose itself?

The SRA has wide-ranging powers to impose sanctions. These can be career-, business-, and life-altering, both by their direct impact and reputational consequences. It is important to obtain advice so that you understand the likely outcome, how sanctions can be mitigated, and whether the costs, stress, and publicity of a referral to the SDT can be avoided.

The SRA can impose:

• a rebuke;
• a reprimand (only for conduct before June 2012);
• a fine.

SRA fines

The SRA now has increased powers to impose fines, moving from a maximum of £2,000 up to £25,000 for “traditional” law firms and those who work in them. This is a significant increase.

For licensed bodies (Alternative Business Structures or ABS) and the individuals (including solicitors) who work in them, the SRA can impose a financial penalty of up to £50 million for an individual or up to £250 million for the entity.

If the SRA considers a fine might be suitable, it is likely to ask for financial information and disclosure in order to calculate what it considers is appropriate. If you are facing financial difficulties, it is important that you are advised how to address and evidence this so that it is properly considered. Delaying or refusing financial disclosure may make it more likely that the SRA will decide to refer the case to the SDT.

We can also advise you as to the appropriate level of a fine, and evidence which may persuade the SRA to impose a fine at a lower level, addressing, for example, other case decisions, seriousness, mitigating factors, and your financial circumstances.

Fines are payable to the Crown, and you may be able to agree a payment plan with HM Treasury.

Can I reach an agreement with the SRA?

The SRA can reach a Regulatory Settlement Agreement (RSA) with you if you are willing to agree the SRA’s case (unless you can agree some amendments to it).

An RSA means you would need to reach agreement on the misconduct being admitted, which Principles have been breached, and a sanction such as a rebuke, undertakings, conditions, or a fine. You may also need to reach agreement on payment of the SRA’s costs of the investigation.

RSAs are usually published on the SRA’s website including any admissions made, and this needs to be considered from a reputational perspective.

An RSA can be a proportionate way to bring an investigation to an end. Discussions as to RSAs take place on a without prejudice basis. However, full admissions are likely to be required, and they may not be available where the SRA considers that the case is sufficiently serious, would require a sanction over and above its internal powers, or where there are concerns about compliance.

Advice and representation during negotiations will assist in determining whether an appropriate agreement can be reached.

Will my sanction be public knowledge?

The SRA will make a decision whether to publish any sanction which it imposes, or which you agree via an RSA. This means that it would be on the SRA’s website against your name or the name of the firm. You will be asked for any comments on a proposal to publish the decision. Generally, there is a presumption in favour of publishing (for a minimum of three years), but given the potential reputational consequences, you should seek advice on whether representations can be made against publication.

If you have questions or concerns about an SRA investigation, please contact Hannah Pilkington.