Regulatory Pulse - 11 March 2026

Bringing you up to speed with developments in solicitors' regulation over the last few weeks.

The seismic Mazur decision concerning the activities which non-solicitors may lawfully perform in litigation reached the Court of Appeal in February. At stake is the ability of firms lawfully to staff matters with legal executives and paralegals under the supervision of a solicitor (or other authorised or exempt person), with the economies and cost savings which that entails, not to mention the careers of those affected. Across three days of submissions, CILEx argued in favour of a less restrictive interpretation of the rules, with the SRA and Law Society taking the opposing position.

With the Court of Appeal's judgment reserved, where have things been left for now?

• The conservative view on the first instance decision is that whilst paralegals may assist in the conduct of litigation, there are many activities which must be carried out by a qualified person in order to avoid the risk of criminal liability and costs challenges.

• The SRA has issued guidance on how to comply with the rules, and promised to "treat sympathetically self-reported incidences of genuine error based on mistaken interpretation of the law, prior to us publishing this page on 20 October 2025."

• CILEx has the power, granted by the LSB in November, to authorise chartered legal executives to carry on the conduct of litigation (without being required to seek authorisation for rights of audience at the same time).

• There are reports of extensive challenges in the County Courts, principally where costs recovery is sought on matters with heavy paralegal involvement.

In the meantime, a serial fare-dodger charged and convicted for travelling on over 100 journeys without a ticket attempted to overturn the conviction on the basis that a "lay prosecutor" had made the applications for summonses. The magistrate's court held that Mazur was irrelevant as the Criminal Procedure Rules has allowed for a non-qualified person to apply to issue a summons and further that Parliament never intended that a breach of the application procedures would "invalidate the proceedings".

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Another case with seismic potential is the ongoing challenge led by Carter-Ruck to the SRA's power to require firms to produce client privileged documents in aid of its investigations. The regulator routinely exercises its statutory information gathering powers to compel firms to produce documents from matter files, but to date the question of how those powers apply to privileged information remains unsettled. The SRA has indicated that it is "seeking to have the proceedings expedited to avoid undue delay in resolving a point of law of public importance".

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The SRA has responded to the government consultation on the proposed transfer of its AML supervisory role to the FCA. SRA Chief Executive Sarah Rapson told the Board that "I have discussed directly with the FCA leadership how we will work closely with the FCA to ensure a smooth, proportionate and effective transition when the new arrangements are implemented… We will continue to act as the competent authority under the Money Laundering Regulations until the transition to FCA supervision is complete."

In the meantime, we are not aware of the SRA taking any further steps to implement its unlimited fining powers for AML breaches under ECCTA 2023 following the government consultation. It may be that those proposals have been put on ice following the proposed transfer to the FCA.

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Just as the SRA seeks to put the collapse of Axiom Ince behind it, another potential scandal has emerged in the form of PM Law, a group of consumer-facing firms which closed abruptly on 2 February. The SRA intervened two days later. Like Axiom Ince, PM Law had grown rapidly by acquiring other existing firms. The precise circumstances of the closure remain murky for now, although the SRA has announced that 'We are investigating a potential fraud, including the misappropriation of client money." The SRA is reported to have returned £9m to clients of the stricken firm, out of a mix of retained client money and the compensation fund.

The parallels with Axiom Ince will be deeply uncomfortable for the regulator, particularly should it transpire that opportunities were missed to identify the group's issues. The LSB has already asked the SRA to explain what it knew about the firm before its collapse.

On that front, Axiom Ince's primary layer insurers are reported to have issued proceedings against the SRA regarding its conduct in the run-up to the collapse. The SRA has in turn issued its own proceedings against Axiom Ince's insurers, asserting a subrogated claim on behalf of clients who made claims on the SRA Compensation Fund.

Looking forward, the SRA intends to take steps to improve how it uses information about firms to anticipate problems before they arise. The new measures announced by the regulator include "a new ‘law firm profiler’ giving our teams a single page view of key data for each of the 9,000 firms we regulate".

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From one high profile law firm collapse to another, the LSB this week issued a formal public censure against the SRA concerning the regulator’s failure to protect consumers affected by the collapse of Sheffield-based law firm SSB Group Limited. The SRA has apologised, acknowledged the harm caused to SSB’s former clients and committed to a programme of reforms, including cultural change, improved risk assessment, strengthened evidence-gathering, and enhanced financial oversight of firms.

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The SRA has issued a warning notice on the marketing of "no win, no fee" arrangements in the context of high-volume consumer claims. The notice has been released in the context of mounting scrutiny by the regulator of the high-volume consumer claims sector. The critical lens through which the regulator is honing in on the sector is demonstrated by the 83 open investigations into 72 consumer claims firms as of 31 December 2025. After the collapse of SSB law, the SRA have been concerned not only with the application of no win, no fee arrangements and the extent to which the risks are understood by clients but also inadequate uptake of appropriate ATE insurance to protect clients from the risk of adverse costs.

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The SRA has been ordered to pay defence costs incurred in connection with its failed prosecution of a Carter-Ruck partner, which are estimated to exceed £1m. The SRA's Chief Executive has in the meantime indicated that it intends to appeal the SDT's summary dismissal of its case, "on the ground that the tribunal erred by reaching conclusions on issues of fact to justify the dismissal and such facts should have been tested in cross-examination at trial".

In the same report to the board, the SRA's Chief Executive indicated that the regulator is "reviewing" the scathing appeal judgment in its prosecution of Ashley Hurst.

In the meantime, the Anti-SLAPP Coalition (of over 120 editors, lawyers, academics, journalists and civil society representatives) has published an open letter to Kier Starmer calling for anti-SLAPP provisions to be included in the next King's speech, anticipated in May 2026. The coalition say that in the last 5 years SLAPPs have been used by "wealthy and powerful claimants" who have "misused the British justice system and the costs associated with participating in pre-trial and court proceedings to stifle protected speech and public participation". The letter calls for a "society-wide remedy". 

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A City firm was cleared by an employment judge of claims brought by an applicant who, having unsuccessfully applied three times for a training contract at the firm, alleged discrimination and victimisation. Whilst the Employment Tribunal found that the firm had rational and plausible explanations for the adverse application decisions, the tribunal in postscript said that the firm "would do well to learn some important lessons from [the claims]" in view of evidence around the handling of the claimants applications. In particular, the tribunal referred to the tone of email correspondence from one of its team involved in the recruitment process as "at very best remarkably gauche and inept and we can well understand why the Claimant was offended to find herself apparently being encouraged to abandon her application…the messages did not amount to acts of harassment…an organisation genuinely passionate about inclusion and diversity would not normally be expected to countenance messages of that sort being sent in its name".

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We have seen AML compliance and workplace misconduct as two of the highest risk areas for regulatory enforcement action for some time now, and that has been borne out over the last few weeks during which we have seen:

• A £68,000 fine for a firm which allowed almost $23 million to pass through its client account as part of agreed escrow services and general advice to a client in Russia in respect of a asset purchase for which the firm was not involved in. The SRA said that there was "no need for [the firm] to receive or make payments relating to that underlying transaction" and that its services amount to the providing a banking facility.

• A City firm was fined £18,000 for failing to prevent its staff from allowing its client account to be used as a banking facility. Unusually, the SRA appears not to have referred to its guidance on financial penalties in setting the level of the fine. "Although the firm was determined to be of greater means, it was not considered proportionate to impose a financial penalty at a higher rate. This was because the firm’s conduct was not deliberate or reckless in respect of its regulatory obligations."  

• The SRA imposed total fines of £75,836 on 7 further firms for breaches identified by its AML Proactive Supervision team.

• The SDT suspended a retired solicitor from practice for one year, having found that he failed to act with integrity in connection with sexually motivated comments at a firm Christmas party.

• Two further solicitors referred to the SDT for allegedly sexualised or sexually motivated conduct.

Other noteworthy recent decisions include:

• Striking-off orders in respect of solicitors who variously misled a lender as to the completion date for a property transaction; provided misleading information to a Family Court as to his location during a hearing; created a misleading attendance note concerning his attendance at a hearing; and provided a misleading CV to a recruitment agency.

• A striking off order, for a partner at a London law firm who made more than 80 unauthorised transfers across 3 years from the client account totalling almost £1.2 million. Most of the payments were transferred to other clients and third parties and the firm's business account but around £77,000 from six client matters were used to settle his personal tax bill.

• A rebuke for a solicitor who allowed the sum of £71,000 held on trust by the firm to remain in client account for a period of 16 years following the death of the trustees. Since being contacted by the SRA, the solicitor took steps to be appointed as trustee and liaise with the beneficiaries to distribute the funds.

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A judgment of the Upper Tribunal identified two separate cases where solicitors had cited fake authorities. Both were referred to the SRA. Judge Fiona Lindsley also identified that one of the solicitors appeared to have uploaded client confidential information to a public AI tool, risking a breach of confidence. She noted that the problem had become so widespread that the claim form for judicial review has had to be amended to require lawyers to sign a statement of truth saying that cited authorities actually exist.

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In a case involving an application for specific disclosure, the High Court considered the obligations of a firm to return a matter file to its client on request. The court referred to the well-known guidance issued by the Law Society in its Practice Note dated 26 July 2022, identifying that various documents (including internal communications, draft documents and working papers) would belong to the firm rather than its client.

Meanwhile, in proceedings under the Solicitors Act 1974, Costs Judge Nagalingam found a breach where a firm failed to disclose WhatsApp messages from the client file. The court held that any communications for which the client has been charged form part of the file and must be captured, saved and disclosed, including WhatsApp messages.

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A network of female general counsel, The Eagle Club, has criticised the Law Society's whistle-blowing guidance for in-house lawyers for entrenching "longstanding bias against reporting" and urging the Law Society to withdraw the guidance. The guidance advises in-house lawyers contemplating whistleblowing to disclose "specific information with factual content" rather than "suspicions or unfounded allegations". The club say there remains a lack of adequate guidance from the SRA and that the Law Society's guidance fails to address the fundamental issue that in-house lawyers "cannot report wrongdoing without significant legal, professional and personal risk" leaving misconduct in corporations unaddressed.