Law Firms Warned on Debt Recovery

SRA  is now dealing with ensuring law firms, involved with debt recovery work, have proper control over what is being done in their name. Many law companies dealing with this matter have been warned, as the authority has noticed that cases, where solicitors working with debt recovery companies are in danger of breaching the Code of Conduct have increased.

Solicitors, dealing with two different cases, who failed to maintain their independence have been handed out fines and costs orders, counting over £140,000. Many other law firms have received a warning note, letting them know advising firms on putting their independence at risk, or being involved in overly aggressive or misleading correspondence

David Middleton, SRA executive director for post-enforcement, said: ‘While we are committed to working constructively with firms, we will take enforcement action against regulated persons who fail to address the issues and risks associated with debt recovery work. We expect firms to ensure they supervise all work their name is attached to.’

The first case referred to a solicitor, working with a debt recovery company, whose nature of arrangement was found irresponsible and resulted in a breach of his duties. The solicitor was fined £40,000 and ordered to pay costs of £35,000.

In our opinion, it is very important to have all necessary legal documents in place, and what is more, in cases like this it is advisable to request a document, drafted especially for you.

In the second case, the relationship between the solicitor and the debt recovery company was compromising his integrity and independence. The arrangement meant the solicitor had recklessly misled the court by facilitating the conduct of litigation by the debt recovery company.The solicitor was fined £15,000 and ordered to pay costs of £50,000.


SRA with New Leniency Policy for Whistleblowers

According to new SRA (Solicitors Regulation Authority) proposals, whistleblowers, involved in misconduct will face lighter penalties.

A consultation on the introduction of co-operation agreements has been launched today by the SRA. According to those legal agreements, solicitors, who might have been involved in misconduct, but report  others` misconduct and help the investigation, will face lenient sanctions. This consultation will run until the 23rd of January.

The SRA intends to enter co-operation agreements not only with solicitors, but also witnesses, who may be facing regulatory difficulties. They will be required to disclose and report anything they know and even witness in court, if necessary. In return, their own conduct will be dealt as defined in the agreement.

The SRA plans, aiming to encourage people to disclose to the SRA , follow the example given by Financial Services Authority and their leniency scheme, which increased almost twice the calls to its whistleblowing line.

SRA director for legal and enforcement David Middleton said: ‘We anticipate cases in which potential witnesses who are worried about their own position will be more likely to come forward if there is potential certainty of regulatory outcome for them and an element of leniency consistent with the public interest.’

In addition Middleton said ‘Respondents to investigations are already aware that the early correction of problems and co-operating generally with us can significantly mitigate any failures on their part. ‘Earlier identification of problems could reduce the impact on clients and the compensation fund or insurers, so co-operation agreements would be another step forward in encouraging disclosure and co-operation.’

This aimed to underline that the proposed approach did not “water down” the requirements of the regulated community to report misconduct,

Whistleblowing can be useful for your business as well, please have a look at our Whitleblowing Policy.

SRA Surprise Visits

The Solicitors Regulation Authority, or just SRA, has announced that
there will be unexpected visits to law firms. The reason for the
planned surprise visits is for the organization to collect accurate
statistical data about the diversity of firms staff and make sure that
firms comply with the diversity requirements and promote diversity in
the legal profession.

The Solicitors Regulation Authority is said to make 100 ‘randomly
selected’ visits to law firms. The intention of the visits is to
observe and assess whether or not those law firms comply with
mandatory requirements for diversity. This plan was
announced just last week in Manchester by the Law Society Firms
Diversity Forum. As stated by one attendee, the plan ‘went down like a
lead balloon’. Even though that the name of the 100 firms was not
identified, the purpose of the visits according to the SRA is to
identify ‘how equality and diversity outcomes are being delivered in
practice’. The visits are also part of a two-stage profession-wide
survey. By September the 4th, 7,131 out of 11,000 firms have completed
such questionnaires and the result showed that 186,084 people work in
those firms. The second-stage questionnaire is intended to be filled
out by each member of staff, providing information like their
ethnicity, disabilities, and age. Other information that will also be
collected includes data about sexual orientation, religious beliefs,
and gender reassignment.

The Legal Services Board in August 2011 announced that the main reason
why diversity data will be collected derives from a statuary
requirement. Additionally, it will become an obligation for all law
firms and chambers as well to present statistical information on their
company websites about the diversity profile of their employees. The
importance of publishing such information comes from the fact that
firms encourage diversity in the legal profession and they comply with
the diverse membership.

The survey’s findings by SRA will be published next year. However, for
the subsequent years it will be a requirement for law firms and
chambers to publish their own statistical data on their websites.
Mehrunnisa Lalani, SRA director of inclusion, stated that some firms
showed resistance to provide such type of information. She stressed
however that the required information must be presented and even if
some people prefer to stay confidential, there is a ‘prefer not to
say’ option. Lalani also added that the visits are intended to
‘capture accurate and complete data about diversity to ensure delivery
of the right outcomes’.

The SRA visits were supposed to start beginning of this month, however
due to the approaching SRA’s movement to new Birmingham premises,
these visits will be delayed. In order to help law firms and chamber
prepare for the surprise visits, the Law Society had published a
practice note earlier in July in order to help the companies comply
with the new requirements for collecting diversity data. According to
President Lucy Scott-Moncrieff, this is said to ‘help the Law Society
better meet the needs of our diverse membership and promote greater
diversity in the profession.’

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