In a Times article about the handling of the SSB Law collapse last month, the newspaper’s legal editor Jonathan Ames highlighted an uncomfortable truth being felt right at the coal face of law firms.
The Legal Services Board’s growing scrutiny of the Solicitors Regulation Authority, particularly in the wake of the collapse, has triggered a regulatory ripple effect that’s being felt most acutely by compliant, well-run firms.
Over the last 12 months, HiveRisk has supported a number of firms that have had their collar felt by the regulator – despite having sound business models and demonstrably good working practices.
The difficulty is this: when large-scale failures occur, like we’ve seen with SSB, Metamorph, and Axiom Ince, it’s often not just the bad actors who suffer consequences.
Good firms get caught in the regulatory backdraft.
In mass claims, especially, where volumes are high and public trust is fragile, the actions of a few bad apples have disproportionately damaging effects across the board.
This isn’t just about avoiding regulatory fallout; it’s about earning and maintaining public trust.
In the current regulatory environment, perception matters as much as process.
Compliant firms may still face reputational damage and pressure when under scrutiny from the regulator, making internal and external communications and management of the process as important as compliance itself.
So what can firms learn from the fallout?
- Don’t assume strong internal practices are enough. Proactive engagement with the SRA is essential.
- Audit your claims handling processes, especially around client acquisition and third-party introducers.
- Review the SRA’s Warning Notice on mass claims – it’s not just guidance, it’s a line in the sand.
There is a need for a more constructive dialogue between regulators and the profession – one that distinguishes genuine risk from bureaucracy and supports good firms in maintaining high standards.
We support firms to navigate these waters not because they’ve done wrong, but because, in this climate, doing it right isn’t always enough. Preparation when engaging with the regulator is critical.
Kate Burt is CEO and founder of HiveRisk
