Regulatory Pulse - 26 June 2025

Sorry for the late timing of this edition, it has been a busy couple of weeks. Please read on to find out what has been happening.

I would like to extend a particular thank you to my colleagues Jake Cotterill, who did most of the work on this edition's update, and Charlotte Thompson, who contributed this edition's Insight column.

The Last Two Weeks

The SDT has published two reasoned judgments on cases involving sexual harassment in the workplace.

In AR, a former partner was suspended for 24 months for admitted breaches in the form of extremely lewd comments towards a more junior colleague at a work drinks event. The judgment is particularly interesting because the Respondent was anonymised following medical evidence as to the impact on his health were his identity to be revealed. The issue gave rise to debate amongst the Panel, who reached a split decision. The balance between the impact of publicity on respondents, on the one hand, and the interests of the public in transparency on the other, are delicate and this won't be the last time the Tribunal needs to make difficult judgments on the issue.

In Brady, a solicitor was suspended for 12 months following two episodes of unwanted sexual conduct towards two different colleagues (further allegations were made but not proved on the balance of probabilities). The Tribunal considered, amongst other things, its jurisdiction over actions outside the immediate workplace, applying Beckwith. In an interesting contrast with that case, the Tribunal found that the SRA had proved breaches of Principles 2 and 5 but not any breaches of the underlying Code (in which regard the fact that the allegations concerned non-consensual touching appears to have been a key distinction). The judgment also illustrates, amongst other things, how sensitive and voluminous the evidence can be in cases of this nature and provides an interesting contrast with AR on the subject of publicity.

Both solicitors faced significant adverse costs awards: £32,655 for AR and £95,000 for Brady. In circumstances where cost awards in SDT proceedings are excluded by many insurance policies it is worth bearing in mind the risk of an adverse costs award before the Tribunal.

 Other reasoned SDT judgments published since our last edition include:

A fine for a solicitor who amended a Lasting Power of Attorney and the date of a cheque without client instructions. The SRA's allegation of dishonesty was not proved: the Respondent's actions were "improper and unwise" but not dishonest, given the state of her knowledge and belief at the time. 

• An unsuccessful application for review of a Section 43 order, which sets out and applies the approach to be taken by the Tribunal when reviewing a decision of the SRA under that section.

• Fines for a firm and solicitor for admitted breaches of the banking facility rule and failures to return client money promptly on a number of matters. The conduct was determined as meeting the lowest level of seriousness required to justify a fine, leading to fines of £5,000 for each Respondent.

• A fine for a solicitor who failed to cooperate with investigations by the Legal Ombudsman and the SRA over a period of three years, and who failed to discharge an undertaking within a reasonable time. The Tribunal accepted that given the impact of a serious health event, allegations of lack of integrity were not proven and a fine at Level 1 of the indicative fine band was therefore appropriate.

• A decision to strike off a solicitor for admitted dishonesty.

The SRA published its now-customary slew of fines for non-compliance with AML rules: following our last edition, I count 14 fines in a total of £248,000 for breaches discovered by the AML Proactive Supervision Team. The largest fine was £63,869 imposed on a Bexleyheath ABS, a fine which represented 1.6% of turnover (following a 30% reduction for mitigating factors).

In the meantime, the government has pledged to introduce "clearer and more proportionate" AML regulations to ease the pressure on professional services firms. 

Other SRA decisions include:

• A significant number of interventions: 11 since 10 June. 

• A section 99 order disqualifying a non-solicitor from holding roles in the profession after he "indecently exposed himself on camera revealing his genitals to external counsel and colleagues" during an online training session.

• A section 43 order for a solicitor who dishonestly traced client and witness signatures on a Land Registry form.

• A rebuke for a firm following technical failures to comply with licence conditions in breach of the Russian sanctions regulations "owing to inadvertent human error".

• A rebuke for a solicitor that failed to ensure there was a proper system in place for his firm to be managed and for client files to be properly supervised. The solicitor failed to discharge his duties as COLP and COFA effectively and did not comply with the subsequent investigation.

A new statistic identified through the use of a freedom of information request indicates that the SRA is awaiting more than £1,000,000 in unpaid fines for internal sanctions as of April of this year. This figure rises from £800,000 in November of 2024. However, it is unclear whether these increasing figures are caused by a larger number of firms failing to pay, or an increase in the financial value of fines laid out by the SRA.

The Law Society pulled few punches in its response to the SRA's consultation on its Business Plan and Budget for 2025/26. The response walked through the highlights of a difficult year for the Regulator, particularly with regard to the collapses of Axiom Ince and the SSB Group, and the LSB's criticism of failings around the SQE, before encouraging the SRA "to ensure it focuses on its core compliance role if it is to regain public confidence and the trust of the profession it regulates."

The Employment Tribunal dismissed allegations of direct disability discrimination and victimisation relating to the reporting an employee to the SRA on the basis that the alleged acts are covered by judicial proceedings immunity. The detailed judgment sets out a very helpful explanation of the absolute privilege which applies to reports to regulatory bodies. The protection is extremely strong, extending in principle to even malicious complaints to the regulator, given the public policy importance of reporting concerns to regulators.

The Court of Appeal's judgment in Federal Republic of Nigeria v P&ID and Seamus Andrew was published earlier this month and makes for fascinating reading. The court at first instance heavily criticised Seamus Andrew, a solicitor and barrister who acted for the defendant, finding that he had acted improperly by receiving and utilising confidential documents that had been leaked from the opposing side. Despite not being party to the proceedings, Mr Andrew sought to appeal in his own right, on the basis that it breached his Article 6 and 8 rights. The Court of Appeal considered those issues, as well as the duties of a solicitor who receives the other side's documents. Read the judgment here.

Another judgment worth reading is Cotham School v Bristol City Council, particularly the discussion from paragraph 96 around the application of data privacy rules to personal data in the litigation context. The judge highlighted that "far too many of the documents in the bundle had been redacted, usually to remove names and other personal details of individuals. As a general proposition, this should not happen." "I remind all parties (and indeed all readers of this judgment) that the data protection legislation contains wide exemptions for the use of personal data in legal proceedings.

Insight
Our previous update touched on changes being consulted upon by both the SRA and BSB on complaints handling requirements, and today we're exploring this further. Both consultations accord with updated requirements by the Legal Services Board (an independent body which approves legal regulators) on consumer complaints, in May 2024. 

The SRA and BSB's proposals aim to make complaints procedures more prominent and accessible, and both regulators are considering a more thorough approach to collecting, reviewing and publishing data on complaints.

However, the most controversial element of the regulators' proposals is the suggestion of changes to when solicitors (and barristers) tell clients about the ability to make a complaint. Currently solicitors inform their clients at the time of engagement of their right to complain. However, because some clients do not always recall being told about the complaints procedure at the start of their matter, the SRA and BSB are considering expanding the requirement for providing information on how to complain at the conclusion of the legal matter as well. 

This proposal has (unsurprisingly) been to many solicitors' chargrin. A common theme of the criticism is the fear that it will do nothing but increase the already heavy administrative burden on solicitors, and add to compliance duties. Additionally, there are concerns that it will simply generate complaints – clients, no matter how well the case has been run, may be encouraged to find fault in solicitors where previously they would not have done so, thereby driving up the number of meritless complaints solicitors need to consider. 

Aside from the fact these proposals may not be liked, whether they are required is another matter.  As the SRA itself highlights, satisfaction levels in solicitors are at their highest, at 87% in 2024. Firms have also indicated to the SRA that the number of complaints received and resolved has increased over the past 10 years – according to the consultation "in 2024, firms told us that 82 per cent of complaints were resolved at first-tier to the satisfaction of the client – which is the highest reported since 2012 when we started collecting this data." Indeed the worst statistics quoted by the SRA centre on complaints handling, as opposed to publicising the ability to make complaints. In recent years there has also been a surge in complaints received by the Legal Ombudsman about lawyers (leading to the need to increase its budget). Maybe more reminders to clients about the complaints procedure would lessen their need to contact the LeO, but may achieve the opposite.

Conversely, last week the profession's consumer watchdog the Legal Services Consumer Panel expressed "deep concern" over legal services providers' "persistent failure… to effectively address complaints from consumers." It has found that only 51% of consumers knew how to make a complaint, and only 48% of those people said they would first complain to the law firm first as required. 21% were "silent suffers" who would not take action even if they were unhappy.

We await the consultation's results, and the SRA's forthcoming thematic review on complaints procedures, with interest. It certainly appears that there are problems with some law firms' complaints processes. However what is not clear is whether the SRA's proposals will be the solution to these issues, or whether they make things worse. 

For more insights from the RPC team into solicitors' regulation, plus in-depth analysis of developments in lawyers' liability, please sign up to our big sister Lawyers Covered.

This month's edition discusses a Supreme Court decision on limitation in construction negligence claims, a Court of Appeal decision on valuer negligence, a barrister's appeal from a Bar Tribunals and Adjudication Service decision and more.

Q&A
We would love to hear your questions, comments and suggestions for future topics. Obviously we can't comment on ongoing cases, and the views expressed in RPC Pulse are not to be relied upon as legal advice.