The Work of the Supervision Function at the SRA Suki Gill – Manager Sue Heads – Team Leader 2 October 2014

Our Purpose To protect consumers of legal services; and Support the operation of the rule of law and the proper administration of justice.

Who do we regulate? Solicitors – 163,015 on the Roll of which 130,812 have Practising Certificates Registered European lawyers, registered foreign lawyers, and exempt European lawyers – 4904 Around 11,300 firms authorised by the SRA, diverse range of firm type, size, turnover and profitability All owners, managers and employers of SRA regulated firms All these individuals need to comply with the requirements of the Handbook

Supervision Supervision directorate of over 100 staff based in Birmingham and London Broken down into: Firm – based Supervision Thematic Supervision Regulatory Management

Supervising firms Building a different relationship with firms, where firms are willing to engage with the SRA Firms take responsibility for compliance and for achieving the right outcomes for consumers Delivering risk based, targeted and proportionate regulation Emphasising a proactive approach put our resources where the greatest risks are determine the approach to supervision of all firms determine the intensity of supervision assess events, complaints and intelligence identify trends which require greater regulatory scrutiny

Managing Risk The regulated community is constantly changing and evolving, so supervision needs to be responsive to: the risk a firm poses its own management and mitigation of risk its approach to, and history of, compliance the level of constructive engagement with the SRA

Supervision Objectives Deal with all high risk matters in a timely manner Respond effectively to the risk of financial instability Identify and respond to potential interventions Progress major investigations and conduct issues Respond to the risks posed by bogus firms Increase active engagement with firms Thematic Work Impact of Legal Aid Reforms The provision of advice in Asylum cases Anti-Money Laundering and financial crime Failure to cooperate with the regulator Dispersed firms So what are our key objectives? As a risk based regulator it is to respond in a timely, proportionate and consistent manner to all high risk matters – that is those that we consider will have the most impact on our consumers of legal services and our regulatory objectives. An important current priority is responding to the widespread risk of financial instability affecting a number of law firms as a consequence of the financial crash, changes to legal aid payments and other factors. Firm failure provides a number of risks to clients and their assets and money and need to be managed effectively through close supervision. As I mentioned before, working with Client Protection, we need to be on top of situations, such as where we have evidence that clients money is at risk, or where a firm has been abandoned, to instigate the process of intervention. It is a strong power and one which we need to use carefully, and requires a fine balance of judgment about if or when an intervention needs to be triggered. We also have a number of highly complex public interest investigations involving high profile matters or conspiracies including organised crime.

What concerns us most Top five risks to the regulatory objectives: Misuse of client money or assets Bogus firms Lack of diverse and representative profession Failure to provide a proper standard of service Money laundering - Inadequate systems and controls over the transfer of money

Supervisory approach & tools Engagement and investigation are not mutually exclusive Our approach distinguishes between those firms that want to engage with us, and those that will not or cannot. Desk based engagement and visits Compliance plans Conditions on PCs, ownership and authorisation Regulatory Settlement Agreements Disciplinary outcomes – rebukes, fine, publication Referrals to the SDT Intervention Engagement and investigation are not mutually exclusive Engagement – each month: 75 visits 3000 – 4000 emails 400 – 600 telephone calls 2013 50 interventions 60 DPs 400 FI comms

SRA enforcement : constructive ways to respond PAUL MILTON Case Manager, Legal & Enforcement 2 October 2014

How do we enforce? Based on our published enforcement strategy Encourages engagement with those who work with us to put things right but strong action where firms do not co-operate or where serious issues arise Engagement is important even where disciplinary action taken At heart: risk-based protection of public interest and credible deterrence

Enforcement tools Obtaining documents and information Conditions on Practising Certificates, ownership and authorisation Internal Disciplinary sanctions – rebukes and fines Referral to Solicitors Disciplinary Tribunal Regulatory Settlement Agreements Intervention

Constructive Responses to Enforcement Action Seek independent expert legal advice early on Tell us sooner rather than later which facts and allegations are admitted; explain clearly reasons for denials Continue to narrow the issues Take any remedial steps you can, especially to improve clients’ positions If possible arrange to have legal representation at SDT hearing

Regulatory Settlement Agreements Policy on RSAs is on our web site: www.sra.org.uk/sra/how-we-work/decision-making/old-critera/regulatory-settlement-agreement-decision-to-enter-into.page Regulatory decision accepted by the solicitor on agreed terms Usually published for transparency Proportionate outcome achieved at reasonable cost in the public interest

Regulatory Settlement Agreements The Agreement: Is in writing and signed by both parties States the facts Contains admissions of failures to achieve outcomes Identifies any remedial action to be taken Imposes sanction where appropriate

Possible terms of an RSA Agreed public statement Implementation of schemes for correction, improvement and restitution Practising controls Removal from the Roll by consent

In summary OFR is all about protection of clients and the wider public Not all breaches require enforcement action Co-operation with the SRA is key - the sooner the better but never too late! Even if enforcement action taken, still sometimes possible to resolve by RSA/consent order or at least agree a statement of facts to save time and costs

Sources of support SRA’s ethics helpline - 0870 606 2577 Solicitors Assistance Scheme (SAS) for independent advice - www.thesas.org.uk LawCare - advisory and support service for lawyers (www.lawcare.org.uk telephone 0800 279 6888) Other networks and groups such as the Sole Practitioners Group, The Society of Black Lawyers, Lawyers with Disabilities Division, The Society of Asian Lawyers and Association of Women Solicitors.

Material breaches Breaches that are 'material' must be reported to the SRA as soon as reasonably practicable Mechanisms for reporting: report@sra.org.uk Factors to consider are : the detriment, or risk of detriment, to clients the extent of any risk of loss of confidence in the firm or in the provision of legal services the scale of the issue the overall impact on the firm, its clients and third parties Have confidence in your judgement