How to avoid and challenge an SRA intervention

We’re delighted to share the first in a series of three articles written for Compliance Lifeline by regulatory Solicitor-Advocate Jonathan Goodwin.

An SRA intervention is the SRA’s nuclear weapon. If your firm is currently being investigated and you fear an intervention may be possible, you must take the situation seriously. An SRA intervention can destroy not only a practice, but the career of a solicitor.

What happens if the SRA intervenes in a practice?

The SRA may give advance warning that an intervention is imminent, but they may not. The power to intervene is contained in schedule 1 of the Solicitors Act 1974. There are comparable powers relating to licensed bodies under schedule 14 of the Legal Services Act 2007. If an intervention occurs, the SRA will close the practice and take possession of all client files, practice records, and money held in the client account. Prior to the action, client and office accounts will be frozen. As the firm no longer exists, all staff will be made redundant. In addition, the costs of the SRA intervention will be passed onto the owners of the law firm.

What can a firm do to avoid an SRA intervention?

If your practice is in danger of an SRA intervention, there are steps you can take to avoid such an action taking place:

Step One: Get legal advice as soon as possible

From the moment the SRA begins its investigation, you should seek expert legal advice. The signs that intervention is imminent are often visible two months or so before the action is taken. A solicitor experienced in dealing with SRA investigations and interventions can swiftly evaluate the risks of an intervention occurring and advise on the actions required to avoid it.

Step Two: Understand the signs an intervention may occur

Signs the SRA is preparing to intervene include:

• a request is made for several active files and/or files currently in storage
• a request for details of Wills held by the firm
• a demand for information within 24 hours
• demands for information which are instantly backed up by a section 44B notice

If any of these signs are present during an SRA investigation, it is crucial to seek legal advice.

Step Three: Know how to avoid an SRA intervention

To avoid an intervention, it is critical to address any underlying issues identified by the SRA. Your solicitor can work with you to satisfy the SRA that an intervention is not necessary. Alternatively, if intervention looks inevitable, you could choose to shut down the practice voluntarily, or restructure.

Step Four:  If an SRA intervention occurs, you can contest it

If the SRA issues a report recommending an intervention, or intervenes without notice, you have eight days to challenge the decision in the High Court. You are required to advise the SRA within 48 hours of the notice being served of your intention to appeal the decision.  Challenging an intervention will not stay the process.

Step Five: An intervention may be successfully challenged

There is a belief that once an SRA intervention occurs, challenges are mere formalities and are never successful. Challenges to SRA interventions may succeed. However, because in the case of a successful challenge, the SRA will simply consent to a court order to withdraw the action, the decision is not handed down.
It is important to note that in the case of an intervention, your practising certificate will be suspended, regardless of whether you challenge the decision to intervene. An application should be made to the SRA immediately to have the suspension of your practising certificate reversed.

A claim by the SRA for recovery of the costs of an intervention can also be challenged via technical arguments contained in sections of Schedule 1 of the Solicitors Act 1974 and Schedule 14 of the Legal Services Act 2007. An experienced solicitor will look at this carefully, given the often-ruinous costs of an intervention which commonly run into six-figures.

So, if you are faced with the possibility of an SRA intervention …

The prospect of an SRA intervention can and should strike fear into the heart of a practitioner. The secret to avoiding the action being taken or challenging it successfully is to seek legal advice immediately if you suspect an intervention may be a possibility.

Jonathan Goodwin Solicitor Advocate Limited have been helping solicitors and other legal professionals with disciplinary and regulatory advice for 25 years.

If you have any questions relating to an SRA investigation or an SDT appearance, you can contact Jon on 0151 909 2380 or by email.