The message the Solicitors Regulation Authority (SRA) has put out today is clear regarding the future of personal injury firms and how they continue to trade. Keep to your principles and don’t fall into a cycle of reckless trading.
That was the message that the Director Samantha Barrass and Chief Executive Antony Townsend were conveying, albeit in different locations.
Barrass told a conference on compliance that they are seeing an increasing number of firms at risk of collapsing due to financial instability and that there had been 150 firms identified to be experiencing very significant financial difficulty.
Stressing the importance of early engagement and full co-operation with the SRA, Barrass said: “We will not tolerate the reckless trading of firms into insolvency and where this happens we will pursue enforcement action under Principle 7 (covering the proper running of a firm), including referral to the Solicitors Disciplinary Tribunal where appropriate.”
She also insisted that they would take a hard line on compliance officers and other senior individuals responsible who fail to try and combat these risks, highlighting that a ‘toxic combination’ of factors including the economic climate, civil litigation reforms and lenders tightening on borrowing is causing a ‘perfect financial storm’.
Meanwhile at the Association of Personal Injury Lawyers (APIL) conference at Celtic Manor, the chief executive of the SRA, Antony Townsend, urged personal injury solicitors not to abandon their principles even if they are forming ventures with new entrants from outside the profession.
Townsend told the conference: “We are looking at the question of insurer ownership in Alternative Business Structure (ABS) and the question of governance and potential conflict of interest. We need to be absolutely clear that ownership and governance and the independence of solicitors do not get muddled up. It is very important solicitors go back to their fundamental principles.”
The conference also heard that the forthcoming Road Traffic Accident Portal (RTA Portal) costs rules will significantly cut income even if solicitors take a success fee from their clients’ damages.
APIL director Stuart Kightley said: “Firms face an overall 16% drop in income from work coming through the RTA Portal, even if they deduct 25% of their clients’ compensation. Fixed costs fall at the end of this month from £1,200 to £500 for lower value claims.”
1. Solicitors Regulation Authority; https://www.sra.org.uk/home/home.page