Solicitors Regulation Authority
The Solicitors Regulation Authority (www.sra.org.uk) is an independent regulator of solicitors set up by the Law Society. The Code of Conduct which law firms are expected to follow are set by the SRA and they regulate how well these are followed. In general, their main focus is the integrity of the legal sector and the interests of the public. For solicitor firms, the SRA provides regulation and supervision. In addition action can be taken against a firm which has broken the code of conduct. This action can take the form of a warning, a fine, further control on how the firm can practice, a referral to a disciplinary tribunal, the revocation of the recognition of the firm or the closure of the firm with immediate effect. 
In order to cover the costs of offering compensation following the closure of law firms, the SRA has set up a Compensation Fund which is contributed to by law firms. In some cases money has been held by the SRA from the law firms accounts and this money is distributed to clients as soon as it is established who is owed. If funds cannot be identified, the SRA will hold the money in the discretionary compensation fund and will make a decision on how much each client will receive based on an application for compensation. Eligibility for this compensation is based on a number of factors. These include the fact that the client has suffered a loss due to the dishonesty of the firm or because they have suffered loss when the firm failed to account correctly for the money they received. Clients may also need to prove that these actions have caused them hardship. However the costs of appointing a new law firm may be covered by the compensation grant. In any case, payments of more than £2 million will not be made. The SRA has noted that the biggest risk to the public in relation to the legal industry is due to fraud and dishonesty. They have set up processes to avoid this happening and have a dedicated unit which gathers information and intelligence on suspects. They ask members of the public or those working in the industry to contact them with any information which could help them with their investigations. The SRA suggest that the following types of conduct should be reported to them immediately:
It has recently been proposed that changes should be made to how this compensation fund is managed and that solicitors should be expected to pay for the losses incurred by firms who are not insured. This would mean an extra amount would be required to be paid by all law firms. The compensation fund would then cover the public if the firm is not insured under Professional Indemnity Insurance. The change was proposed because many firms found it difficult to get this type of insurance because of the number of claims being made in recent years and the prohibitive cost. These proposals will be dealt with during May 2012 and could mean increased payments from law firms into the compensation fund and ultimately increased prices for legal clients.  |
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