The SRA has ramped up its closures of law firms for breaching accounting rules, with the number of “interventions” more than doubling in the past year. According to Hazlewoods, the chartered accountants and business advisors specializing in the legal industry, the number of closures increased from four to eleven in the last 12 months.

Interventions related to suspected dishonesty also saw a rise, climbing 14% from 14 to 16 over the same period.

An “intervention” is the SRA’s process of temporarily or permanently shutting down a law firm to protect clients’ funds and interests. During an intervention, the SRA can seize documents and money, suspend lawyers’ practicing certificates, and conduct a full investigation.

The sharp rise in these interventions follows the high-profile collapse of law firm Axiom, where more than £60 million in client funds was lost.

Andy Harris, Partner at Hazlewoods, says the sharp rise in interventions for account rule breaches and suspected dishonesty highlights the SRA’s determination to take a tougher stance in the wake of the scandal.

Says Andy Harris: “The collapse of Axiom has really spurred the SRA into action. They are going to look into problems with client accounts or allegations of dishonesty in much greater detail.”

The SRA is seeking to expand its regulatory powers under the Economic Crime and Corporate Transparency Act, allowing for greater flexibility in fining firms involved in economic crime. Most significantly, the SRA is pushing for greater powers to protect businesses – aiming for unlimited fines to cover all forms of misconduct not limited to financial breaches.

Andy Harris adds: “The proposals in the consultation paper are a very substantial step in increasing the SRA’s powers. If the SRA does get the powers to substantially increase the fines that it can levy, then law firms are going to have to increase the amount they invest in their internal compliance teams.”