The Solicitors Regulation Authority (SRA) avoided the threatened vote of no confidence at the Law Society’s Annual General Meeting (AGM) despite widespread support for opposition to the proposed separation of COLP and COFA roles from those with “unliteral decision making” responsibilities within law firms.
An open letter from the recently established SME and Boutique Law Firm Alliance had indicated it would seek a vote of no confidence in the SRA leadership if the proposals were not reviewed. the SRA has since said it would “pause” implementation.
Speaking at the AGM, Alliance co-founder Jade Gani once again called on the SRA to provide evidence the proposals would deliver the outcomes needed to avoid law firm failures like Axiom Ince: “If regulation is evidence-based, show us the evidence. If it is proportionate, prove it.” said Gani, adding “You cannot repair failures of regulatory oversight by making the regulated do more of the regulator’s job.”
The Alliance, she said, welcomed the proposals to pause the proposals and commit to further engagement. But the damage was done by the “terrible lapse in judgment” that led to the proposals being advanced in the first place. Proposals which, she said, “appear to treat owner-managers as inherent regulatory risks, rather than responsible professionals whose personal accountability is often their greatest safeguard.”
Responding to the debate incoming Law Society president Brett Dixon said the organisation was listening to its members and recognised the strength of feeling amongst law firms, sole practitioners and other members. “We share the objective that regulation is proportionate and evidence-based” he added, citing the Law Society’s own feedback to the proposals.
A statement published by the Alliance the day after the AGM said the discussion had “demonstrated the strength of feeling surrounding the SRA’s performance, the challenges facing smaller law firms and the importance of meaningful professional representation.” It added the membership body remained committed to “securing an appropriately constituted vote of no confidence in the SRA Board.”
A vote, it feels, is necessary to “provide a formal mechanism for members to express their assessment of the regulator’s leadership and performance” sending a message to SRA, the Legal Services Board and other relevant stakeholders.
The statement concludes it wishes to remain represented in the debate, and calls again for clear and evidence-based reconsideration of the proposed Rule 8 restrictions and their impact on smaller firms, alongside greater transparency concerning the SRA’s response to significant regulatory failures; including measurable commitments to improvements in regulatory oversight, governance and public protection.
It may be possible to revisit the no confidence vote at The Law Society’s December council meeting with a Special General Meeting also said to be an option.
Members of the SME and Boutique Law Firm Alliance have taken to social media in the hours after the Law Society’s Annual General Meeting (AGM) to express their dismay at what they describe as a “dismissive” attitude toward their opposition to the changes. Their ire, centred around a description of their efforts as “the sugar rush of performative action”, has caused a stir with members taking to LinkedIn to make their feelings know.
Peter Redmond of Clutton Cox said to “dismiss the actions and views of a profession who are openly expressing how entirely unhappy they are with both Solicitors Regulation Authority and The Law Society as being akin to a child on a sugar rush simply reinforces the divide that is growing between those on the ground and those who regulate/represent them.”
“We know The Law Society opposed the proposals and we know the Solicitors Regulation Authority didn’t listen to the objections and steamed ahead anyway. We also now know that Legal Services Board’s position is that they have no issue with the Solicitors Regulation Authority changing their mind about the proposals and we all now wait with baited breath to hear what the next step is from the Solicitors Regulation Authority.”
Others expressed their “anger” and “disappointment” at the description which was “utterly insulting and appalling.”
COLP/COFA Plans
The paused COLP and COFA plans refer to proposed amendments to Rule 8.4 by the Solicitors Regulation Authority (SRA), designed to strengthen firm governance and client money protection following the Axiom Ince collapse.
Under the proposals, law firms would be banned from appointing an individual to the roles of Compliance Officer for Legal Practice (COLP) or Compliance Officer for Finance and Administration (COFA) if that person also holds “unilateral decision-making” responsibilities or significant control over the firm. The rule introduces mandatory separation of these oversight roles from primary decision-makers once a firm hits specific financial thresholds: a turnover of £600,000 per annum or holding £2 million in client accounts.
One Response
The profession has had a difficult time.
Large bills are landing on law firms’ desks, bills that exist because of failures of regulatory oversight, not failures of the firms asked to pay them. The Legal Services Board’s review of Axiom Ince found that the SRA missed repeated opportunities to act. Those who pay for that failure are, once again, the regulated.
At the Law Society AGM, the strength of feeling was plain. Jade Gani put the case for the SME and Boutique Law Firm Alliance in terms that deserve to be remembered: “If regulation is evidence-based, show us the evidence.” Then came the description of members’ efforts as a “sugar rush”. It was a careless phrase, and it caused real offence. It also exposed a fissure that was already there, between those who practise and those who regulate and represent them.
The relationship between the regulator and the regulated must mature. Fairness and rigour are not opposites; they are the same quality seen from different sides. A regulator that expects firms to do more of its work, while its own record invites scrutiny, cannot ask for deference. It must earn confidence by disclosing its evidence, testing its assumptions and explaining its reasons. A mature profession, for its part, should be capable of demanding that, while accepting that serious misconduct must be pursued without fear or favour.
That requires more democracy in our professional life, not less: a Law Society whose council listens before it is pressed, members who can express a view of their leadership through proper mechanisms, and representation that SME firms and sole practitioners recognise as their own.
Things cannot be as they were. It would be futile for the Council to imagine otherwise. The wiser course is to meet this moment with openness, and to build something better in its place.