The SRA's proposals for the use of its new fining powers

The SRA has recently acquired increased fining powers (with effect from July 2022). They are currently consulting on their new approach to imposing financial penalties on regulated firms and individuals. The SRA have stated in this consultation that they believe certain types of behaviour should not normally attract an SRA fine and should therefore be sent to the Solicitors Disciplinary Tribunal, where it is necessary to utilise more serious sanctions or controls to protect against risk or maintain public confidence in the profession. The SRA considers that sexual misconduct, discrimination and any form of harassment falls into this category; financial penalties will only be considered in exceptional circumstances in these instances.

In this article we explore the SRA's proposals and consider the subsequent challenges that may arise.

Sanctions for sexual misconduct, discrimination and/or harassment

We previously explored the SRA's increased fining powers (see article here). With effect from 20 July 2022, the SRA can now fine traditional law firms, and those who work in them, up to £25,000 (they have long had much greater powers to fine licensed bodies and their personnel). 

The SRA are consulting on how these greater fining powers should be used. They are proposing changes to their Enforcement Strategy and a more rigorous (some might say formulaic) approach to calculating the size of a fine. The consultation is open until 14 November 2022. 

The main focus of this article is on one aspect of these proposals, namely the exercise of the SRA’s fining powers in relation to instances of sexual misconduct, discrimination and harassment. 

The SRA has said in this consultation that cases involving sexual misconduct, discrimination or harassment are "so serious in nature and raise attitudinal issues that present a risk to others" that a financial penalty is highly unlikely to be an appropriate sanction. In other words, this category of case is to be sent to the Solicitors Disciplinary Tribunal almost always, unless exceptional circumstances exist. 

The SRA frames this as likely to have "a positive impact on encouraging equality, diversity and inclusion in the profession by sending a clear message we take these matters seriously and will particularly benefit those groups who are more likely to be impacted by the behaviours identified." Perhaps another way of putting the same point is that the SRA is out to deter regulated persons from engaging in these behaviours (and/or fostering a workplace culture that condones them).  

Whilst the SRA's focus on diversity and inclusion is welcomed as always, this proposed approach to new sanction powers begs the question as to whether the SRA is best placed to make these judgment calls and, by extension, what exactly its role is in cases involving sexual misconduct, discrimination and harassment. We explore this further below. 

Is the SRA up to the job?

The SRA has a number of rules concerning sexual misconduct, discrimination and harassment. For example, it requires those it regulates to act “in that encourages equality, diversity and inclusion” (Principle 6), and it requires of solicitors, RELs and RFLs that “You do not unfairly discriminate by allowing your personal views to affect your professional relationships and the way in which you provide your services” (r.1.1, SRA Code for Solicitors etc).

These are important rules, serving highly significant professional, ethical, societal and moral objectives (amongst other things…). However, caselaw from both the employment domain (e.g. Grainger plc v Nicholson [2010] ICR 360) and professional ethics (e.g. Holbrook v Bar Standards Board, case no. 2021/441, March 2022) demonstrates the complexity of the legal issues engaged as regards the application of the Equality Act 2010.

The decision in Beckwith v SRA likewise demonstrates the challenges of applying SRA rules to the private lives of solicitors (“…Principle 2 or Principle 6 may reach into private life only when conduct that is part of a person's private life realistically touches on her practise of the profession…or the standing of the profession…”).

In other words, and unsurprisingly, there is nuance here. Human behaviour covers a broad spectrum of beliefs, actions and intent. Legislation such as the Equality Act 2010 seeks to achieve a balance between state intervention and freedoms of belief and speech, and so on.

The issue therefore arises whether the SRA, when exercising these new powers, can be trusted to differentiate between sexual misconduct, discrimination and harassment cases that warrant a harsher sanction and those that are exceptional in nature so as to only require a fine.

Indeed, there is a related issue whether its proposed guidance is even correct i.e. to the effect that cases involving sexual misconduct, discrimination and harassment are axiomatically “so serious in nature” as to require a trip to the Tribunal.

It is only very recently that the SRA has had its fining powers increased twelve-fold. Arguably, it might be better for the SRA to find its feet with its newfound power before seeking to increase it further by exercising discretion on how to apply it with regards to such sensitive cases.

Personal impact statements

Personal impact statements ('PIS') are written or oral statements from a complainant presented to the SRA as part of the investigation or tribunal process. PIS give the complainant an opportunity to explain how the event(s) complained of have affected them, and what the impact of any potential sanction may have on them.

The SRA have confirmed that they will be trialling the use personal impact statements to assist with coming to a fair and appropriate sanction. This does address to some extent the concern about the SRA’s approach to nuances of behaviour, but the difficulty with this is how the SRA will ascertain how much weight to place on these and how the balance will be struck between the complainants and respondents. With no precedents in this regard, the SRA will have to provide clear guidance and criteria that will allow for reliable application.  

Other aspects of the proposed changes

In the SRA's Financial Penalties Statement (here) and its open consultation, it recognises the need for more transparency and robustness of processes due to the recent increase in its powers. Whilst this is promising, it would be more encouraging to see this translated into clear guidance that can be referred to. It may be beneficial for the SRA to look to how other regulators deal with these kinds of issues and consider their processes and procedures as they will be more established and will be a good reference point. 

In essence, the overarching question is whether the SRA has the resources, the competency and the formalities in place to administer the requisite sanctions. Whilst we consider that the new process may be welcomed by firms and solicitors because it is likely to be faster, the SRA has stated that it anticipates referring the most serious cases to the SDT – which does not deliver on the promise of quicker outcomes. 

What exactly is the SRA’s role here?

By “here” we mean the boundaries between personal and professional conduct, and between acceptable behaviour and behaviour amounting to misconduct, discrimination or harassment. 

It is notable that the SRA’s rules do not expressly invoke applicable legal concepts in this domain e.g. under the Equality Act 2010. For example, does the word “discriminate” in r.1.1 of the SRA Code for Solicitors (extracted above) mean “discrimination” under the 2010 Act, or some broader concept and, if so, then what?

One theory therefore is that the SRA should be using its rules to enforce compliance by its regulateds with existing common law principles and legislation that give form and definition to concepts such as “sexual misconduct”, “discrimination”, and so on. 

Another theory is that the SRA should be using its rules to deter and punish behaviours that fall outside the strictly ‘legal’ definitions but are nonetheless reprehensible and, say, undermine public trust in the profession. 

The manner of drafting of the SRA’s rules allow for both possibilities. It is unclear which a court would consider to apply. The SRA can be expected to argue for the broader interpretation.

This is an important debate to have now. Professionals are subject to codes of conduct. Those require professionals to act with integrity. ‘Integrity’ can be seen as a “useful shorthand to express the higher standards which society expects from professional persons” (Wingate, para. 97). This provides a pathway for the SRA to argue that behaviour can be sanctioned even if (say) it does not fall squarely within the statutory definition of discrimination. Someone else might argue that this fails to achieve the necessary element of predictability for a conduct rule (see Beckwith at 33-34). 

This debate is already taking place in another area of regulated legal services. The Bar Standards Board (“BSB”) is currently consulting on the regulation of non-professional conduct of barristers (here). The BSB are concerned with how barristers conduct themselves in their personal lives as this can also affect the public trust in the profession. We can see how it would be beneficial for the SRA to also regulate solicitors in areas of their personal life that could affect their professional integrity, but again, there needs to be clear guidance on this that can be referred to and applied consistently and fairly. There is also an interesting contrast to be drawn between the nature of legal analysis in the BSB’s consultations on such issues, and that of the SRA. 

Conclusions  

The SRA wants to exercise its new sanction powers in a proper, predictable and proportionate manner. It is therefore consulting about them. These are laudable objectives. 
However, its consultation does not seem to us sufficiently to address some of the challenges facing the SRA in this regard. We consider the main

challenges to be (and with reference to cases involving sexual misconduct, discrimination and harassment): 

• The complexity of the underlying legal principles engaged, especially in the domains of equality and discrimination law. 
• The existence of significant differences of views regarding seriousness of this class of behaviours. (Of course, the extent of such differences will also depend on who one canvasses for such a view…).
• The interplay of disputed factual circumstances, and the subjectivity of some of the legal concepts involved (e.g. in relation to harassment under the 2010 Act), is bound to lead to complex and difficult judgment calls by the SRA. Will it be up to the task?
• The uncertainties of some of its key rules and Principles. Do they invoke concepts defined by the common law and legislation, or is the SRA able to take a broader view? 

Above all, our concerns are that the SRA is proceeding too swiftly and not engaging sufficiently in a wider debate, especially a legal debate, over these issues. Consultation helps, but it may not be enough. We shall have to see how things develop.