Should Law Firms Self-Report to the SRA or Their Insurer After Mazur & Stuart?

Further to our two previous articles discussing the decision resulting from the appeal in Mazur & Stuart v. Charles Russell Speechleys LLP – accessible via the links below – we have received concerns from various firms regarding:-

1. Making a self-report to the Solicitors Regulation Authority (‘SRA’), due to activity that has breached the Legal Services Act 2007 (the ‘LSA’) and breaches that have arisen from the activities.
2. Notifying or updating their Professional Indemnity Insurers of any concerns that may arise.

Read our previous articles on Mazur here:

• Mazur & Stuart v. Charles Russell Speechleys LLP – The Reality and Guidance
• Mazur & Stuart v. Charles Russell Speechleys LLP – FOLLOW UP: Conduct v Support

Making a Self-Report to the Regulator

Our current view is that it would be premature to make a self-report, with the rationale being:

1. The SRA has not yet confirmed its final stance, although it has recognised that wrong advice has been given. It will be completing an internal investigation, and we assume (and hope) that it will soon issue guidance to the industry on its expectations, which may require self-reports from firms that have been in breach of the LSA. Should our view change, we will provide an update.
2. In the meantime, firms must investigate and record where they may have been in breach and the extent to which this has occurred, identifying those involved and the services provided. It will be essential to establish the full impact of any breach, considering both the financial impact (fees earned) and the number of matters and, therefore, clients affected. Having a complete and documented understanding of the extent of any breach will enable the Firm to categorise the seriousness and extent of the breach(es), allowing a decision to be made on self-reporting and further enabling that to be made promptly, if required.
3. For now, we recommend that firms add the details of the breach(es) to their COLP breach register and detail the information obtained through the internal investigation.
4. We are aware that firms will be concerned about breaching the requirement to self-report if there has been a serious breach, or there is a belief that a serious breach could occur, but we are dealing with unusual circumstances. The reality is that this is not an issue isolated to a handful of firms but is widespread across the whole industry. We suspect the SRA will be grateful not to receive thousands of self-reports, but that it will instead, on an outcomes-focused basis, appreciate a common-sense approach with firms reacting appropriately to the Mazur case and the issues raised.
5. The focus must not only be on investigating the scale of any issue the Firm faces but also implementing a strategy to prevent further breaches from occurring. If you require further individual guidance on how to do this, please contact us on 0203 985 8550. We can represent both firms and individuals.

Notifying Your Professional Indemnity Insurer

We have also received enquiries from firms asking if it is necessary to notify or update their Professional Indemnity Insurers of any concerns that may arise.

Given that no claims are likely to arise from any actions taken, there is no reason to report. There is a general requirement to report regulatory issues to the insurer, but for the same reasons as noted above relating to the SRA, it is recommended to hold back any external reporting until the position is clear and the impact on the Firm is understood.

However, changes may impact regulation and result in adjustments to case management. Both would need to be reported to Insurers at some point, but doing so now, in our view, would be premature. When a clearer outcome is known, a decision can be made on which external parties, including professional indemnity insurers, should be told.

Next Steps – How We Will Help

Our team at the Regulation and Compliance Office (‘RACO’) will continue to consider and research this issue. If the SRA issues guidance or our view changes, we will provide firms with more practical guidance to protect themselves and their staff.

For those firms that utilise our services for regulation and compliance, we will engage directly with your team. For those who are not, you can contact us, and we will assist where possible. Alternatively, you can watch for updates as we issue them.

The seriousness of the issues raised by this case and the overall impact on staff and firms is significant, and any support we can offer is, we hope, welcome.

Self-Reporting to The SRA, CLC and CILEX

If a firm is required to make a self-report or is notified of an enquiry or investigation, it is essential to fully understand the issues at hand. It is important to ensure full cooperation in addressing these issues or in explaining and defending against any unfounded allegations. The actions that a firm takes early on will help to determine the outcome.

Find out more about our related defence and support services, which include:

• Self-Reporting
• Enquiries and Investigations
• Regulatory Settlement Agreements
• Agreed Outcomes
• Solicitors Disciplinary Tribunal Support Services

Get in touch

To ask any questions about the Regulation and Compliance Office and how we can support your Law Firm, please call us on 0203 985 8550, complete the online enquiry form, or email us info@regulationandcomplianceoffice.co.uk