14
Examination of witnesses
Paul Philip and Juliet Oliver.
Q16 The Chair: We are continuing our special session today on SLAPPs, strategic litigation against public participation. I am very grateful that we are joined by representatives of the Solicitors Regulation Authority. Can I ask both of you to introduce yourselves? In doing so, Mr Philip, could you say to whom the SRA is accountable?
Paul Philip: Thank you very much for the opportunity to be here. I am the chief executive of the Solicitors Regulation Authority. The SRA is the regulatory arm of the Law Society. We are the independent regulator of just about 10,000 law firms in England and Wales, with 150,000 practising solicitors.
On accountability, we are essentially an independent body. We are in some ways accountable to the Legal Services Board, which is a government organisation set up by the Legal Services Act 2007. Our relationship with the Law Society has been quite a long and, at times, a difficult one, but we are independent from both a strategic, policy and operational perspective. On accountability, I would suggest that we are responsible to the Legal Services Board, which is responsible for legal services in England and Wales.
The Chair: Yes, but the people in whose interests you exist and operate are whom?
Paul Philip: We are most definitely a public interest regulator; there is no doubt about that. We are here in the interests of the public, not in the interests of the profession.
The Chair: And you would consider them to be your customers?
Paul Philip: The main stakeholders; absolutely.
Juliet Oliver: I am the general counsel of the Solicitors Regulation Authority.
Q17 The Chair: Thank you both very much for being here. I will start by asking Mr Philip when the SRA first became aware of this phenomenon that we are referring to as SLAPPs.
Paul Philip: Probably very early last year, with the Ukraine conflict and the attention given in Parliament to this particular issue. Generally speaking, we have certainly been aware of litigation disputes and the conduct of solicitors in litigation disputes for some time. We first published our guidance on that in 2015, and SLAPPs is really a manifestation of inappropriate behaviour by lawyers within the context of a particular set of litigation circumstances. In 2022, around about April, May or June time, was when we first became aware of it.
The Chair: That is quite interesting. It was only the involvement of Parliament and the awareness of the practice by oligarchs that brought this to your attention.
Paul Philip: Absolutely. As previous witnesses have alluded to, there has always been asymmetry of knowledge between professionals and laypeople—in this case lawyers and laypeople—in all aspects of litigation. There has always been an equality of arms issue in relation to people who have deep pockets, as it was put earlier, and can afford lawyers, and those of lesser means who cannot. In this particular circumstance, it all came to the fore, and I think the acronym was pronounced sometime early last year—introducing the whole idea of SLAPPs and the potential abuse of process by individuals, and some solicitors, to stifle public debate and public interest—through people publishing public interest work to the world.
The Chair: It was quite interesting to hear from the previous panel and the evidence they gave that, in a way, this is less about specific types of accusations levelled against a defendant—as in those who are on the receiving end of the investigation—and more about the tactics and the abuse of process that is so debilitating for journalists. It did not attract action and attention from the SRA until it became something associated with oligarchs. As we heard last year, they just represent the tip of the iceberg.
This morning, I was looking at the corporate strategy on your website, and I was quite interested to read that one of your corporate ambitions is to be anticipatory and to proactively look at tomorrow’s opportunities and challenges, as well as today’s. If that is the overall corporate ambition and approach of the SRA, why did it take until early last year, and the involvement of Parliament, before you felt that this was something that required the level of attention that you are now giving it—which is very welcome. We heard from the witnesses previously that they are pleased that the SRA is now taking this seriously, but it is just a bit hard to reconcile.
Paul Philip: As I say, lawyers’ conduct in disputes litigation and pre-litigation is a long-standing issue and we first issued guidance as long ago as 2015. If you see SLAPPs as being a question of whether an unarguable case is being argued inappropriately, that happens in all aspects of litigation in the country. Most of the concerns from our disputes guidance, and the reason why we published it in 2015, looked at the way in which people corresponded during pre-litigation and litigation, the extent to which that was inappropriately threatening, totally without merit, and whether or not solicitors—as officers of the courts, whose primary obligation is to assist the courts and to act with honesty, integrity and independence—was actually to the fore in those cases. From our perspective, and the way in which we approached it, SLAPPs is just one manifestation of that behaviour in the context of a particular type of litigation.
The Chair: Since this is something that you have taken more seriously, could you tell us about what action you have taken and how you have used what powers you have currently against any of the law firms that you would consider to be acting outside of your code?
Paul Philip: In the last year or so, we engaged with the committee when it came to prominence. We wrote to parliamentarians who had alluded to this in Parliament. We received some information but nothing particularly specific. We have received most of our open investigations from CASE (Coalition against SLAPPs in Europe). At this time, we have about 40 open matters that came to our attention sometime in the spring and summer of last year.
We are following our normal process, which is to investigate and seek evidence of wrongdoing or misconduct; to give a natural justice opportunity to the lawyer in question, through a right to respond; and then to make a decision. I would guess that about half of those 40 matters would probably come to a correct conclusion, or to a conclusion, by the middle of this year.
The Chair: It will be the middle of this year before you are able to conclude any of them.
Paul Philip: Between now and the middle of next year.
The Chair: Wow; it is quite a slow process.
Paul Philip: It is about nine to 10 months. That is our natural process for the steps that we have to go through in order to properly investigate it to seek evidence, particularly where people are not complying with providing that evidence. Seeking court orders to get that evidence can be quite tricky and complicated.
The Chair: So at the moment, there are no law firms here in the UK that have been subject to any sanction from the regulator because of activity which would be considered unlawful, or certainly unacceptable under the terms of your code on the way in which lawyers are meant to operate.
Paul Philip: In the context of SLAPPs, not as yet, because all bar one came to our attention since the late spring of last year.
The Chair: Okay. We will come on to talk a little bit about some of this stuff in detail. One of the things that I want to ask was about your existing powers and what case you are making for stronger powers. It is quite notable that the maximum fine that you are able to levy against a law firm is £25,000. That does not sound very much, particularly to some of these very large, wealthy law firms.
Paul Philip: We have for some time been advocating for a greater deterrent ability by the SRA in its fining powers. The £25,000 figure that you have articulated is about three[1] months old. Prior to that it was £2,000.
The Chair: Wow.
Paul Philip: The MoJ agreed to change that only about three or four months ago. We had been lobbying for a change for a significant amount of time. As you know, the economic crime Bill contains much wider potential fining abilities, with unlimited fines, but in relation to only a specified risk of economic crimes, of which SLAPPs is unlikely to be one. We would advocate for a much greater deterrent with a much enhanced fining regime for people who are deemed to have done wrong things. That is the first thing.
The second thing is that our investigation powers—that is, our powers to demand information—kick in only when we have passed a particular part of the process where we deem there is a formal investigation. There are obviously a number of preliminary points that need to be explored before we can decide if that is the case. We have asked for, and there is a clause in the Bill, suggesting an increase in our investigation powers, so that we can ask for information at the very beginning of our process.
At the very beginning of our SLAPP cases, when we open the case up, we may agree to formally investigate it only once we have fully understood the nature of what the person is complaining about. It is only then that we would be able to demand information from law firms in relation to the correspondence.
The Chair: Before I move to my colleague, who wants to ask a supplementary, any public body seeking to attract government support for more powers, and ultimately Parliament’s support and agreement to it receiving more powers, needs to be able to demonstrate that it is using the powers that it already has to its maximum capacity. As I say, £2,000 to a law firm is nothing. Have you used it a lot?
Paul Philip: We have used that a lot. I can happily get you the numbers on an annual basis, but we would fine firms £2,000 multiple dozens of times a year.
Lord Lipsey: I want to press this point. I hear what you say about how much it has gone up and about wanting it to go up further, but this really is a drop in the ocean. You do not get a cup of coffee at Mishcon de Reya for £25,000. When I look at the other regulatory authorities around the place, I see that the fines imposed by the Competition and Markets Authority are often tens of millions of pounds; even the Gambling Commission has had several fines recently at the £15 million level. Are you not worried that this is going to give rise to a suspicion that you feel these are fellow solicitors who deserve only a light tap on the wrist, when they should have their hands cut off?
Paul Philip: All I can do is repeat that we have advocated publicly, for many years, that the fining regime should be increased and that it is not an adequate deterrent. It is a pea-shooter against a tank, to use the analogy, and therefore it should be increased.
What we can do is refer the firm and/or the solicitor to the independent tribunal that decides these matters: the Solicitors Disciplinary Tribunal. It is a body that is independent of the SRA and it is a subsidiary of the Law Society.[2] The Solicitors Disciplinary Tribunal can raise higher fines. I think—and I look to my colleague on my left—that the largest fine ever was £230,000 or thereabouts.
Juliet Oliver: There has been a £500,000 fine but the vast majority are much less than £100,000.
The Chair: Before Parliament gives any organisation powers, it is critical that it knows the organisation is going to use them. It is all very well giving people powers but if all they do is say they have them but do not use them then it is not very confidence-inspiring.
I will refer to one final thing before I move on. I understand that you announced that you were carrying out a thematic review of a targeted sample of 25 firms. This is in the context of SLAPPs. You were due to publish the results of this thematic review, so I guess this is a proactive piece of work, at the end of last year. Has that happened yet?
Paul Philip: It has not happened yet. I am afraid there were one or two delays, but we intend to publish it in the next three weeks. I am happy to circulate it to the committee at that point.
The Chair: That would be great; thank you very much indeed.
Q18 Baroness Featherstone: In the last session—you were sitting here, and so you will have heard—there was some criticism of the generality of the Government’s proposals: that there was a lack of detail, and that there were no meaningful guidelines. What is your view of the Government’s legislative proposals on SLAPPs?
Paul Philip: It is very difficult. Listening to the previous witnesses, I thought that they probably know more about it than we do, so I bow to their expertise.
As a regulator, we are interested in whether the lawyers in question have acted in line with our code of conduct, and that is set out in Section 1(3) of the Legal Services Act and our own documentation. That is things such as: have they acted honestly with integrity; have they acted independently; and, above all, have they complied with their obligations as an officer of the court in relation to their role in the administration of justice? That is our raison d’être and that is what we are interested in. All those aspects come to the fore in the context that we are talking about this afternoon.
On the Government’s proposals, it is about looking at how litigation can be curtailed in inappropriate circumstances, where it is an abuse of authority and an abuse of power. That is certainly something we would look at. As I said before, is the case properly arguable and, if it is properly arguable, is it being argued properly through correspondence and those types of things?
The three-stage test propounded by the Government at the moment seems perfectly reasonable to us, but I agree with previous comments that the devil is most definitely in the detail; there is no doubt about that. It is difficult to see how, without all the evidence being brought to bear, a decision-maker could properly make a decision in advance of that information being in front of them. It is quite a tricky issue to curtail these issues until they get in front of a judge.
Baroness Featherstone: What did you think of the formal costs protection scheme proposal?
Paul Philip: I would be personally in favour of them, but, again, it is very difficult to operate that in practice until all the information is in front of the decision-maker.
The Chair: Do you feel that there is even a need for greater legislation in this area?
Paul Philip: I think there is a need to try harder to reduce the burden on individuals; in this case, academics, journalists and so on. There is no doubt that the human cost of this is huge for those individuals, and there is no doubt there is a public interest. Quite a lot which has been curtailed has been brought into the public domain. The question here is: how do you do that? How can you practically come up with a regime that gets to the nub of the issue and does not have a deterrent effect on individuals bringing into the public domain information that ought to be there?
I am not 100% sure that we can guide you an awful lot on how that is done. However, I definitely agree that, if there was some way in which we could do it and be part of the solution to that, we would welcome that discussion.
The Chair: Before we move on to look at the issue of money laundering more specifically, you heard the witnesses in the last session explain the relationship between law firms and PR firms and investigators—the concierge offer was how it was described. Is that something that you are looking at? Are you looking at the way in which law firms are operating with others that are not regulated by yourselves, and at the fact that there is a loophole for them to operate in that way? Is that something that has drawn your attention?
Paul Philip: It is certainly something that has been drawn to my attention in the last hour. As I said before, the reality is that solicitors are obliged to act with integrity and honesty and to comply with the law. The fact that some of that evidence is admissible, in certain circumstances, does not detract from the fact that it might be a breach of the law in harvesting the evidence. We would expect solicitors to treat that type of activity with extreme caution. It is certainly something that we will be considering after today.
The Chair: Was it something that you became aware of only today?
Paul Philip: We knew that it was happening, but we have no evidence that there is any misconduct on the part of any solicitors.
The Chair: Has nothing come up yet through the thematic, proactive work that you have done that has led you to identify that?
Paul Philip: Not that I am aware of.
Juliet Oliver: Not on this particular issue. We have certainly seen a growth of firms offering reputation management services and that being an area that the sector has moved into. The law firms that we selected to look at for our thematic review are those that advertise reputation management as a service, and that is what we were targeting in that review. However, the issue of the relationship they have with others is not something that we have specifically seen come up through our work thus far, but it is certainly something we can look further into.
The Chair: You will go back to look at that and explore it further now.
Juliet Oliver: Yes.
Baroness Bull: Directly related to that, in the very excellent briefing note that we received, I note that the legal services sector was assessed in HMT’s National Risk Assessment of Money Laundering and Terrorist Financing 2020 as being at high risk of abuse for money laundering purposes. That seems to directly link to the allegation that was made to our committee by Clare Rewcastle Brown about exactly this point that our Chair has raised. How have you responded to that assessment of the sector as being at high risk of abuse? That seems terrifying.
Paul Philip: That has been a major programme of work for the SRA for five or six years now. We are engaged with the Government through the economic crime strategy group. We work with other regulators and with OPBAS, which is essentially an arm of the FCA and regulates us in relation to money laundering. We regulate over 6,000 firms in relation to high-risk money laundering activity, which is essentially conveyancing, trust and company services work.
It is transactional. As one of the earlier witnesses alluded to, it is where it has been historically quite easy to launder money in this country. Solicitors, estate agents and accountants have all been identified through the assessment that you have alluded to as being potential enablers of money laundering. If you wanted to launder money by buying an expensive property in central London, the solicitor now will be obliged to do a variety of fairly high-level checks in relation to who you are. Are you politically exposed in any way? Where is the source of funds? Where did you get that money? That is in order to try to stop that.
We have active programmes of work at this point in time. It is no doubt the case that using professional enablers—if I can call them that—has been an issue in the past. We have fairly intensive programmes of work to make sure that that type of thing is not happening. To answer the Chair’s question from earlier, we have taken quite significant action against law firms in relation to AML breaches over the past three years.
The Chair: We have rather pre-empted where we were going, but let me go straight to Lord Foster, who has been swotting up on money laundering.
Q19 Lord Foster of Bath: It is not a problem at all. It is a really very important issue. As Baroness Bull has rightly said, the Treasury identified the legal services sector as at high risk of abuse. That was in 2020. The SRA responded a year later, by saying, “Keeping money launderers out of the legal services has long been a priority of ours.” So it is a high priority for you. Yet, as you have heard, several of our witnesses have suggested that there is quite a lot of money laundering going on in SLAPPs cases.
You already work with legal services firms in relation to trying to stop money laundering, so you say. Yet I looked at your briefing note from March of last year and, as far as I can see, the anti-money laundering legislation does not apply to legal services, and therefore does not apply to advice being offered around a SLAPPs case. Can you confirm whether that is currently the situation?
Paul Philip: As I understand it, that is absolutely the current situation. Current regulations relate to transactional activity. It is asking where the money is, where it comes from, and who you are as an individual.
Lord Foster of Bath: From the sale of property, or whatever
Paul Philip: Absolutely.
Lord Foster of Bath: If that is the case, do you have a view as to whether the anti-money laundering legislation ought to be changed to take account of these sorts of services, such as SLAPPs and other things?
Paul Philip: That is an interesting question. Anything that would assist in dealing with the SLAPPs situation, as you call it, would be something that we would support. Whether or not there is any evidence that laundered money is used in this respect is yet to be proven, but it may well be the case; I am not denying it. If expanding those regulations and that legislation would assist here then we would happily support it.
Lord Foster of Bath: Thank you; that is helpful. Given that the issue has been raised—and as you rightly say there is no evidence; it is just that a lot of people seem to believe that SLAPPs cases lead to the use of money laundering—are you proactively looking for that evidence? You claim you are already doing work, but is there more you could and should be doing?
Paul Philip: I think there is always more that we could be doing; there is no doubt about that. We have active programmes of proactive work, visiting high-risk firms. We recently gave a small firm in Cambridge[3] a £20,000 fine for not having an appropriate risk assessment in relation to money laundering. By that, we mean that they had not properly thought about it and some of the obvious things[4] such as the identity of the client and where they got the money—that type of thing. We have a developing track record in doing that. Could we do more? Absolutely. We have expanded our resource in relation to that significantly in the last few years.
Lord Foster of Bath: It is a very useful example, but were those money laundering procedures within that firm that relate to those things that are covered by anti-money laundering legislation, or in relation to all its services? Do you expect a firm to have anti-money laundering procedures in relation to all its activities, or just those activities that are covered by the legislation? There is a big difference.
Paul Philip: Those were activities that were covered by legislation.
Lord Foster of Bath: So given those accusations, not proven, that there is money laundering, it is claimed, in relation to SLAPP cases, you have not so far looked at whether a firm had its own procedures in place to check that money laundering was not being used to fund a SLAPP?
Paul Philip: If we receive an allegation of a SLAPP that contains an allegation of breaking the law, such as laundering money, then we would look at that.
Lord Foster of Bath: Would it not make sense for you as the regulator to require every firm to have in place procedures that relate to all aspects of money laundering and potential money laundering, not just those that are covered by the current AML procedures and laws?
Paul Philip: Potentially, yes. There are various aspects of our work in which we could demand of the profession a variety of assurances in relation to where the money came from, who the clients are that they are working for and what type of work they were doing. It is just that we cannot cover everything at once, so it is a question of where to start.
The Chair: Can you describe the relationship between you and law firms? What is the culture between the regulator and its regulated community? When the SRA comes knocking on the door, are they worried?
Paul Philip: I think if we knock on the door they are worried. I do not imagine that we are hugely popular with the profession. We issue a lot of guidance and a lot of warning notices. We take action in relation to the firms: we close firms; we refer solicitors to the tribunal that strikes off solicitors. I imagine being contacted by the SRA is probably not something that most solicitors would welcome, if I can put it that way. Other than that, I am not too sure what you are alluding to, Chair.
The Chair: I am quite interested in how you think you are perceived by the law firms that you regulate. Do they see you as a regulator that is clearly active in the public interest, keeping standards high and keeping their feet to the flames?
Paul Philip: I think you would get mixed views. I think an awful lot of solicitors would say that we are far too interventionalist and far too harsh. Some solicitors would argue in particular areas of law that we should be doing more in a variety of different aspects of solicitors’ work. It is very much a mixed bag.
Lord Foster of Bath: Just to pick up on one point you just said, and taking it back very briefly to money laundering, you referred to your warning notices. I have looked through them. The warning notices in relation to money laundering are very specific about those activities of a law firm that relate to AML and nothing else. Do you think it might be a good idea for your next version of the warning notice to speak more generally about preventing any form of money laundering, regardless of the activities that are covered by AML?
Paul Philip: I have absolutely no objection to looking at that.
Q20 Lord Hall of Birkenhead: Let me talk about deterring solicitors from taking on SLAPP cases at an early stage. I think you were saying that you are dissatisfied with the fining powers, or the amount of the fining powers, that you have. You said that it is quite early to draw too many conclusions at the moment, because this is relatively new and investigations are going on, so to come to conclusions is difficult. But would you be up for considering as a deterrent naming and shaming those firms that you felt were not pursuing the sort of course you think they should pursue with SLAPP cases?
Paul Philip: If you mean would we name firms that were under investigation against which we found nothing proven, then no, we would not.
Lord Hall of Birkenhead: I am not asking that.
Paul Philip: If you mean putting into the public domain the outcome of an investigation and what we felt they had done wrong, then absolutely.
Lord Hall of Birkenhead: You would publish results in some form.
Paul Philip: Yes.
Lord Hall of Birkenhead: Would you do that after a case, or annually, so we get some sense of the numbers of cases that you are dealing with?
Paul Philip: For the most part, we would do it shortly after we make the determination on the case—so on an ongoing basis.
Lord Hall of Birkenhead: Are there other things that you think you would do to emphasise your role, so that when the knock on the door comes people take you extremely seriously? Are there other things that you are contemplating to make the point that you are a regulator with teeth?
Paul Philip: To go back to the general AML issue and the economic crime Bill, we have, as colleagues have noted, published various pieces of guidance and warning notices to the profession as to how seriously we take any misconduct in this area. We are advocating for very significant fining powers. As you rightly say, the proof of the pudding is most definitely in the eating, so there is absolutely no point in receiving those fining powers and not using them.
We have intimated to the profession in the area of AML that they can expect to see us being far more muscular once we get the appropriate deterrent powers. Were we to receive those types of powers more generally, there would be absolutely no point in giving us those powers if we were not prepared to use them and prepared to litigate that in court, which I am sure we would end up doing. That in itself would create a deterrent and awareness-raising among the public and the profession. I suspect it would have an impact on all areas of the law, and SLAPPs are probably no different from many other areas of our regulatory work.
Lord Hall of Birkenhead: On the softer side, on the cultural relationship between you and the firms that you regulate, you are saying in evidence to us this afternoon that this is something that you have been getting a grip of over roughly the last year. Do you think you still have a cultural job to do with the firms that you are regulating and the standing nature of SLAPPs, and their difficulties and dangers to the culture of free information around stories that matter and are in the public interest? Do you think you have more of a job to do with that, or are you where you want to be?
Paul Philip: I think we can always do more. I am just mulling over what little I know about the report that has been developed, which we have already alluded to and which we are publishing in the next few weeks. I think it is fair to say, turning to my colleague, that there was a mixed response from law firms, both on levels of knowledge and whether they felt it was an issue or not. I think I am right in saying that
Juliet Oliver: That is absolutely right. The awareness of the guidance and the principles, and the extent to which that is trained out in firms, is very mixed. There is clearly still a job to do in raising that awareness and keeping that drumbeat.
Lord Hall of Birkenhead: How do you do that?
Paul Philip: Through publicity, and by making clear what we expect of firms; through engagement with the profession, such as events; through public pronouncements by us as a regulator; and, perhaps most importantly, through getting some outcomes that recognise that if you go to these places then bad things will happen.
Lord Hall of Birkenhead: Do you think that firms understand the difficulties of using PR firms—in fact, you were saying that some companies do that themselves—and investigators and so on? Is that something that you think you should be looking at and having views on?
Paul Philip: As I said earlier, we will definitely take that away as something to consider.
Lord Hall of Birkenhead: There was a call earlier on saying that maybe PR firms should have some form of regulator rather akin to yours. Do you have a view on that?
Paul Philip: Regulation is not always the answer, but where there is a problem and there needs to be an improvement of that problem, you have to think about whether imposing some sort of regulatory arrangement would make it better or worse. I know that many people would argue it might make it worse.
Lord Lipsey: Do you have a press officer, or a press operation, designed to maximise the publicity given to cases where you find against member solicitors?
Paul Philip: We have an active press office and communications department, and we routinely publish outcomes of all our decisions and refer to them in a communique with the profession.
Lord Lipsey: Publishing is one thing but propagating is another. Is your press operation charged with propagating these cases, or do you just put out a list of them and hope that people pick them up?
Paul Philip: We are interested in propagating themes, so if there was a particular theme or issue then we would propagate that. For instance, we had a big push on wholly without merit judicial review claims and asylum matters where the profession seemed to be taking action to JR the Government. When these cases came to court they were thrown out as being just a delaying mechanism. That was a complete abuse of power and process, and we would make that a theme to indicate to the profession that this is wholly unacceptable.
Lord Lipsey: We are still not quite there yet. I am not talking about themes. I am talking about individual cases—this solicitor in Cambridge has done that, and that is bad. Do you go out and try to sell that story to the Cambridge News so that the solicitor’s business is damaged, or do you just put out a quiet notice saying what you decided?
Paul Philip: Our experience is that the press is very quick to pick up on these. Most of our outcomes are in the press every day of the week.
The Chair: I want to pick up a couple of final points, and go back to the thematic review. Did you choose the law firms used in your sample for a specific reason? Were they the ones that you suspected were involved in SLAPPs?
Juliet Oliver: These are the firms that do this kind of work and sell reputation management services, both on the claimant and defence side. We wanted to have a look at both sides.
The Chair: Do they tend to be large firms?
Juliet Oliver: From my recollection, they tend to be large firms but not entirely. There are some niche firms that are smaller which do this kind of work.
The Chair: When you do publish this, are you likely to identify the names of the firms that participated and were part of that review?
Paul Philip: I would hazard a guess and say no, but let us take that one away.
Juliet Oliver: We can have a look at that.
The Chair: I just wondered if there was any effort on behalf of the SRA to ensure that, particularly the larger, more wealthy firms that you are regulating, understand their responsibility to the corporate reputation of the law itself. I am quite interested to know how much you make clear to them their responsibility to uphold the reputation of the profession of which they are a part, and also how you go about doing that yourself. Do you know what I mean? Because they are big firms, they have more responsibility than perhaps a small firm in Cambridge. If they screw up or are acting badly, the fact that you are going after them and that they are being held to account by their regulator gives everybody else confidence that our legal profession is being properly held to account. Is that how you go about reflecting that kind of responsibility as the regulator?
Paul Philip: You mentioned earlier the culture between us and these firms. The larger firms, and indeed all firms, will be in no doubt of what we expect of them and the impact that they have on the reputation of the profession in the way in which we expect them to act in accordance with our code, and we are very clear with them about that.
If you were to identify the firms that operate in that area, you would find that they are probably publishing their services generally, so unless there is a good reason why we would not publish them, I think we probably should. We will take that one away.
The Chair: As a regulator that exists to serve the public interest, part of serving the public interest is demonstrating you doing your job, and that requires a regulator to be willing to name and identify those organisations that you have found to be substandard in some way or not meet your expectations.
Paul Philip: I quite agree, but the way in which we would determine whether an individual firm or an individual was in that position would not be through the type of review that we have done. This is information gathering, more than anything else. We would go through our process and, as I said earlier, give people the right of response in a proper way before we could possibly publish anything that might suggest that they have done something wrong.
The Chair: I recognise that you cannot unfairly accuse or name people, but nonetheless there is a responsibility for you as a regulator to give people who are not law firms—people who are on the receiving end of aggressive activity—as well as customers of law firms, the confidence that this profession is being properly regulated. They get that confidence by seeing the regulator do its job.
To go back to your strategy, you set out that you have three strategic priorities and quite clear objectives. One of them is about maintaining high professional standards for law firms, as the public would expect, and ensuring that you provide an equally high level of operational service. Do you report against your strategic objectives on an annual basis? Is there a way for us to look at how you are performing against your own strategy?
Paul Philip: We produce annual reports. We produce published board minutes every six weeks. We produce balance score cards on what we think we are doing and how we contribute towards the strategy and so on.
The Chair: The board collectively does an annual review of your performance against strategy and publishes it on your website.
Paul Philip: We do an annual report and that gets published on our website. As I mentioned earlier, we are also subject to a performance review by the Legal Services Board, which is published annually.
The Chair: That is helpful. My final question goes back to the scale of SLAPPs. Even though at this time it is impossible to define them in a way that everybody is able to do so, SLAPPs are not just something that is the practice of oligarchs but are the practice of wealthy individuals or institutions. They may be using the legal profession to prevent legitimate public inquiry, some of which will be by journalists but some of which will be by public bodies. What, if anything, is the SRA doing to make sure that you are aware of any kind of aggressive legal activity on behalf of clients against public bodies that are also legitimately seeking to investigate activity? I declare an interest as somebody who was the former chair of the Charity Commission. Do you ever take it upon yourself to inquire after public bodies like that to see whether they are the subject of very aggressive legal action?
Paul Philip: We have done on occasion. We do not do so on a regular basis. We talked about the thematic review in this area. We do a variety of thematic reviews, seeking evidence of how things are operating in various areas of law and speaking to a variety of bodies about what they think. That is the primary way in which we get some grass-roots feedback as to how it is working and how the profession should be regulated.
The Chair: It may be another potential route for you to pursue in understanding the nature of aggressive legal activity on behalf of clients who quite rightly should be subject to public scrutiny.
I am going to draw this to a conclusion. As I said at the beginning, I think I can speak on behalf of the committee in saying that we are pleased that the SRA has, over the last year, taken steps to draw attention to the danger of SLAPPs. You talked about your guidance. All of that is good and we are pleased with the progress that you have made, and it was very good to hear that from the witnesses in the first panel. However, I think you will also have heard from the questions that we have asked today that we feel that there is a need for even more action by the regulator to combat this type of activity. I hope that you have found coming before us a useful exercise in being able to step up the inquiry into different potential avenues which you might not otherwise have done previously.
Paul Philip: Thank you very much. It has been very useful and we have quite a number of ideas coming out of the day’s events. As you have heard from me in the last hour, quite a lot of the legislative framework surrounding how solicitors are regulated could be improved, from our point of view, including perhaps the fining regime across the board. I am interested in Lord Foster’s idea around AML more generally, so I think it has been a worthwhile experience.
The Chair: If you can provide us with the other information that we have asked for when you are able to, such as the completion of the thematic review and further information on the use of your existing powers at this time, that would be very helpful. Thank you very much.
