SRA Intervention: What is it, and how to avoid it

sra intervention

What is SRA intervention?

In certain situations, the Solicitors Regulation Authority (SRA) may intervene in a solicitor’s practice to protect the interests of clients and maintain the integrity of the legal profession. This intervention typically occurs when there are concerns about the way a law firm is being run or when there are public interest risks, or risks to the clients.

The SRA’s intervention powers are derived from the Solicitors Act 1974 and Schedule 14 of the Legal Services Act 2007. These powers allow the SRA to intervene in a law firm’s practice, suspend solicitors’ practising certificates, seize documents, papers and money held by the firm, and take other necessary actions to protect clients’ interests.

The SRA intervention process

The SRA intervention process involves the appointment of an intervention agent who takes control of the firm’s practice. The agent is usually a solicitor or a team of solicitors appointed by the SRA. Their primary responsibility is to ensure that client matters are properly dealt with and that client’s money and files are protected.

When the SRA intervenes in a law firm, they will typically notify the firm’s clients about the intervention and provide them with guidance on what to do next. The SRA intervention agent will review the firm’s files and determine the appropriate course of action for each client matter. This may involve the intervened firm transferring files to other solicitors, refunding fees, or taking other steps to ensure that clients’ interests are safeguarded.

After an intervention, the SRA will retain any client funds held by the intervened practice on statutory trust. The appointed agent will endeavour to identify individuals who have an entitlement to the funds and facilitate their distribution.

In cases where clients are unable to wait for the distribution of the funds held on trust, they can seek assistance from the Compensation Fund.

 

Reasons for intervention

The SRA may intervene in a law firm’s practice for many different reasons. Whilst the specific circumstances can vary, listed below are some common situations that may lead to an SRA intervention:

  • Dishonesty or misconduct: If the SRA suspect dishonesty, fraud, or serious misconduct by solicitors or employees within a law firm, they may intervene to protect the interests of clients and the public.
  • Financial concerns: The SRA may intervene if there are concerns about the firm’s financial stability, such as misappropriation of client funds, accounting record irregularities, or serious financial mismanagement.
  • Client protection: When there are risks to clients’ interests, such as the failure of a firm to provide proper legal services, inability to handle client matters effectively, or a lack of appropriate professional indemnity insurance, the SRA may intervene to ensure clients are protected.
  • Absence or incapacity: If a solicitor becomes incapacitated due to illness, disability, or death, and there are no appropriate arrangements in place to protect clients’ interests, the SRA may intervene to ensure continuity of service.
  • Non-compliance with regulatory obligations: Failure to comply with SRA regulations and rules, including compliance with the SRA Code of Conduct, may trigger an intervention. This can include inadequate supervision, breaches of professional obligations, or repeated non-compliance with regulatory requirements.
  • Risk to the reputation of the profession: If a law firm’s actions or conduct pose a significant risk to the reputation of the legal profession as a whole, the SRA may intervene to address the situation and maintain public confidence in solicitors.

It’s important to note that the SRA follows a risk-based approach when considering interventions. They assess the severity of the risk posed to clients and the public, and the likelihood of harm occurring, before deciding whether an intervention is necessary.

 

Avoiding SRA intervention when facing financial issues

Avoiding SRA intervention is essential to mitigate mounting debts against a firm. The best way to avoid SRA intervention is to act early. Addressing underlying issues may help to satisfy the SRA that intervention will not be required. In some cases, voluntary closure or restructuring of a firm may be required.

Recovery First can assist firms facing financial difficulties in the process of restructuring or closing their firms in an orderly manner to avoid SRA intervention.

We also work alongside professional service providers, such as insolvency practitioners to discreetly sell a firm’s cases to multiple purchasers on their panel of solicitors. This mitigates the risks to the buying firms and results in a higher value for the work in progress (WIP) being recovered whilst ensuring SRA compliance.

Moreover, it doesn’t have to be all the firm’s cases; Recovery First can equally work on discrete tranches of cases or particular claim types.

The Recovery First team manage the transfer of files from start to finish, placing case files with an approved solicitor’s firm to protect the integrity of the client’s case.

The Recovery First process is highly flexible, and they can also assist law firms directly in completing a compliant runoff, avoiding SRA intervention.

Recovery First’s services are suitable for all types of legal work, using a simple, ongoing process with no up-front costs.

Read our recent case study to find out how we helped provide a positive solution to a law firm facing financial difficulties, ensuring SRA intervention was avoided.

We guarantee 100% confidentiality for all clients. If you would like to find out more about Recovery First’s process, feel free to get in touch with our team today using the details below and we will contact you to discuss the process.

It's never too late to speak to Recovery First. Contact us now in the strictest confidence

Sally Dunscombe:

sally.dunscombe@recoveryfirst.co.uk

David Johnstone:

david.johnstone@recoveryfirst.co.uk

Telephone:

01357 440140

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