The Solicitors Regulation Authority has issued a stark warning that firms conducting reserved activities without authorisation and failing to address the implications of the Mazur judgment can expect enforcement action.
The SRA’s Position
In guidance issued last week, the regulator acknowledged there has been “concern and confusion” in the profession about the status of unauthorised fee earners following the High Court’s Mazur ruling. The judgment confirmed that only authorised individuals can conduct litigation – employment by an authorised firm or working “under supervision” is not sufficient.
The SRA stated: “If you are conducting a reserved activity without authorisation and have not addressed the implications of the judgment and our guidance, you can expect us to use all appropriate investigative and enforcement powers to identify and address this misconduct.”
“Sympathetic” Approach to Historical Breaches
The regulator said it will look “sympathetically” at historical mistakes made by firms who self-report. While each case turns on its facts, cases of genuine mistakes made before firms became aware of the implications will be treated with understanding.
However, no such allowance will be granted for firms who have not changed their business model since Mazur and continue to potentially breach the law.
Industry Response
- Association of Costs Lawyers: 75% of members surveyed expect increased demand for authorised costs lawyers following the ruling, with 71% anticipating more challenges to solicitors’ bills lacking evidence of supervision
- CILEX: Has secured permission to appeal the Mazur ruling, citing “significant impact” on its members and law firms
- Calls for safe harbour: Some in the profession have called for the SRA to provide a safe harbour for firms who hadn’t realised they were acting unlawfully, but the regulator has stopped short of this
Key Factors
The SRA said key considerations include:
- Who has assumed ultimate responsibility for litigation steps
- Who is exercising judgment on day-to-day progress and overall direction
Read the full alert here